Correlation Between Digital World and Dow Jones
Can any of the company-specific risk be diversified away by investing in both Digital World and Dow Jones 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 Digital World and Dow Jones into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Digital World Acquisition and Dow Jones Industrial, you can compare the effects of market volatilities on Digital World and Dow Jones 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 Digital World with a short position of Dow Jones. Check out your portfolio center. Please also check ongoing floating volatility patterns of Digital World and Dow Jones.
Diversification Opportunities for Digital World and Dow Jones
0.55 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Digital and Dow is 0.55. Overlapping area represents the amount of risk that can be diversified away by holding Digital World Acquisition and Dow Jones Industrial in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Dow Jones Industrial and Digital World 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 Digital World Acquisition are associated (or correlated) with Dow Jones. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Dow Jones Industrial has no effect on the direction of Digital World i.e., Digital World and Dow Jones go up and down completely randomly.
Pair Corralation between Digital World and Dow Jones
If you would invest 4,093,693 in Dow Jones Industrial on September 2, 2024 and sell it today you would earn a total of 397,372 from holding Dow Jones Industrial or generate 9.71% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 1.56% |
| Values | Daily Returns |
Digital World Acquisition vs. Dow Jones Industrial
Performance |
| Timeline |
Digital World and Dow Jones Volatility Contrast
Predicted Return Density |
| Returns |
Digital World Acquisition
Pair trading matchups for Digital World
Dow Jones Industrial
Pair trading matchups for Dow Jones
Pair Trading with Digital World and Dow Jones
The main advantage of trading using opposite Digital World and Dow Jones positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Digital World position performs unexpectedly, Dow Jones 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 Dow Jones will offset losses from the drop in Dow Jones' long position.The idea behind Digital World Acquisition and Dow Jones Industrial pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.| Dow Jones vs. Dream Finders Homes | Dow Jones vs. GEN Restaurant Group, | Dow Jones vs. National Beverage Corp | Dow Jones vs. BJs Restaurants |
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 Instant Ratings module to determine any equity ratings based on digital recommendations. Macroaxis instant equity ratings are based on combination of fundamental analysis and risk-adjusted market performance.
Other Complementary Tools
| Performance Analysis Check effects of mean-variance optimization against your current asset allocation | |
| Price Ceiling Movement Calculate and plot Price Ceiling Movement for different equity instruments | |
| Portfolio Comparator Compare the composition, asset allocations and performance of any two portfolios in your account | |
| Stocks Directory Find actively traded stocks across global markets | |
| Bond Analysis Evaluate and analyze corporate bonds as a potential investment for your portfolios. |