Correlation Between Dow Jones and DB Physical
Can any of the company-specific risk be diversified away by investing in both Dow Jones and DB Physical at the same time? Although using a correlation coefficient on its own may not help to predict future stock returns, this module helps to understand the diversifiable risk of combining Dow Jones and DB Physical into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Dow Jones Industrial and DB Physical Gold, you can compare the effects of market volatilities on Dow Jones and DB Physical and check how they will diversify away market risk if combined in the same portfolio for a given time horizon. You can also utilize pair trading strategies of matching a long position in Dow Jones with a short position of DB Physical. Check out your portfolio center. Please also check ongoing floating volatility patterns of Dow Jones and DB Physical.
Diversification Opportunities for Dow Jones and DB Physical
0.37 | Correlation Coefficient |
Weak diversification
The 3 months correlation between Dow and XGLS is 0.37. Overlapping area represents the amount of risk that can be diversified away by holding Dow Jones Industrial and DB Physical Gold in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on DB Physical Gold and Dow Jones is a relative statistical measure of the degree to which these equity instruments tend to move together. The correlation coefficient measures the extent to which returns on Dow Jones Industrial are associated (or correlated) with DB Physical. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of DB Physical Gold has no effect on the direction of Dow Jones i.e., Dow Jones and DB Physical go up and down completely randomly.
Pair Corralation between Dow Jones and DB Physical
Assuming the 90 days trading horizon Dow Jones Industrial is expected to generate 0.82 times more return on investment than DB Physical. However, Dow Jones Industrial is 1.21 times less risky than DB Physical. It trades about 0.16 of its potential returns per unit of risk. DB Physical Gold is currently generating about 0.1 per unit of risk. If you would invest 3,880,733 in Dow Jones Industrial on September 3, 2024 and sell it today you would earn a total of 610,332 from holding Dow Jones Industrial or generate 15.73% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 97.66% |
| Values | Daily Returns |
Dow Jones Industrial vs. DB Physical Gold
Performance |
| Timeline |
Dow Jones and DB Physical Volatility Contrast
Predicted Return Density |
| Returns |
Dow Jones Industrial
Pair trading matchups for Dow Jones
DB Physical Gold
Pair trading matchups for DB Physical
Pair Trading with Dow Jones and DB Physical
The main advantage of trading using opposite Dow Jones and DB Physical positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Dow Jones position performs unexpectedly, DB Physical can make up some of the losses. Pair trading also minimizes risk from directional movements in the market. For example, if an entire industry or sector drops because of unexpected headlines, the short position in DB Physical will offset losses from the drop in DB Physical's long position.| Dow Jones vs. Eastern Co | Dow Jones vs. Uber Technologies | Dow Jones vs. AKITA Drilling | Dow Jones vs. Chemours Co |
| DB Physical vs. Wheaton Precious Metals | DB Physical vs. Gaztransport et Technigaz | DB Physical vs. Norman Broadbent Plc | DB Physical vs. SilverCrest Metals |
Check out your portfolio center.Note that this page's information should be used as a complementary analysis to find the right mix of equity instruments to add to your existing portfolios or create a brand new portfolio. You can also try the Financial Widgets module to easily integrated Macroaxis content with over 30 different plug-and-play financial widgets.
Other Complementary Tools
| Risk-Return Analysis View associations between returns expected from investment and the risk you assume | |
| Crypto Correlations Use cryptocurrency correlation module to diversify your cryptocurrency portfolio across multiple coins | |
| My Watchlist Analysis Analyze my current watchlist and to refresh optimization strategy. Macroaxis watchlist is based on self-learning algorithm to remember stocks you like | |
| Performance Analysis Check effects of mean-variance optimization against your current asset allocation | |
| Global Correlations Find global opportunities by holding instruments from different markets |