Correlation Between IShares VII and Dow Jones
Can any of the company-specific risk be diversified away by investing in both IShares VII 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 IShares VII and Dow Jones into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between iShares VII PLC and Dow Jones Industrial, you can compare the effects of market volatilities on IShares VII 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 IShares VII with a short position of Dow Jones. Check out your portfolio center. Please also check ongoing floating volatility patterns of IShares VII and Dow Jones.
Diversification Opportunities for IShares VII and Dow Jones
-0.36 | Correlation Coefficient |
Very good diversification
The 3 months correlation between IShares and Dow is -0.36. Overlapping area represents the amount of risk that can be diversified away by holding iShares VII PLC 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 IShares VII 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 iShares VII PLC 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 IShares VII i.e., IShares VII and Dow Jones go up and down completely randomly.
Pair Corralation between IShares VII and Dow Jones
Assuming the 90 days trading horizon IShares VII is expected to generate 2.96 times less return on investment than Dow Jones. In addition to that, IShares VII is 1.25 times more volatile than Dow Jones Industrial. It trades about 0.03 of its total potential returns per unit of risk. Dow Jones Industrial is currently generating about 0.12 per unit of volatility. If you would invest 3,387,678 in Dow Jones Industrial on September 1, 2024 and sell it today you would earn a total of 1,103,387 from holding Dow Jones Industrial or generate 32.57% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 99.2% |
| Values | Daily Returns |
iShares VII PLC vs. Dow Jones Industrial
Performance |
| Timeline |
IShares VII and Dow Jones Volatility Contrast
Predicted Return Density |
| Returns |
iShares VII PLC
Pair trading matchups for IShares VII
Dow Jones Industrial
Pair trading matchups for Dow Jones
Pair Trading with IShares VII and Dow Jones
The main advantage of trading using opposite IShares VII and Dow Jones positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if IShares VII 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.| IShares VII vs. iShares Core SPI | IShares VII vs. iShares MSCI World | IShares VII vs. iShares SMIM ETF | IShares VII vs. iShares Swiss Dividend |
| Dow Jones vs. Catalyst Pharmaceuticals | Dow Jones vs. Sphere Entertainment Co | Dow Jones vs. National CineMedia | Dow Jones vs. Mink Therapeutics |
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 Bonds Directory module to find actively traded corporate debentures issued by US companies.
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