Correlation Between BetaShares Geared and Dow Jones
Can any of the company-specific risk be diversified away by investing in both BetaShares Geared 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 BetaShares Geared and Dow Jones into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between BetaShares Geared Equity and Dow Jones Industrial, you can compare the effects of market volatilities on BetaShares Geared 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 BetaShares Geared with a short position of Dow Jones. Check out your portfolio center. Please also check ongoing floating volatility patterns of BetaShares Geared and Dow Jones.
Diversification Opportunities for BetaShares Geared and Dow Jones
0.94 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between BetaShares and Dow is 0.94. Overlapping area represents the amount of risk that can be diversified away by holding BetaShares Geared Equity 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 BetaShares Geared 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 BetaShares Geared Equity 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 BetaShares Geared i.e., BetaShares Geared and Dow Jones go up and down completely randomly.
Pair Corralation between BetaShares Geared and Dow Jones
Assuming the 90 days trading horizon BetaShares Geared Equity is expected to generate 1.92 times more return on investment than Dow Jones. However, BetaShares Geared is 1.92 times more volatile than Dow Jones Industrial. It trades about 0.12 of its potential returns per unit of risk. Dow Jones Industrial is currently generating about 0.21 per unit of risk. If you would invest 4,329 in BetaShares Geared Equity on August 25, 2024 and sell it today you would earn a total of 212.00 from holding BetaShares Geared Equity or generate 4.9% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
BetaShares Geared Equity vs. Dow Jones Industrial
Performance |
| Timeline |
BetaShares Geared and Dow Jones Volatility Contrast
Predicted Return Density |
| Returns |
BetaShares Geared Equity
Pair trading matchups for BetaShares Geared
Dow Jones Industrial
Pair trading matchups for Dow Jones
Pair Trading with BetaShares Geared and Dow Jones
The main advantage of trading using opposite BetaShares Geared and Dow Jones positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if BetaShares Geared 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 BetaShares Geared Equity 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. Vistra Energy Corp | Dow Jones vs. Fluence Energy | Dow Jones vs. Old Republic International | Dow Jones vs. Empresa Distribuidora y |
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 Price Transformation module to use Price Transformation models to analyze the depth of different equity instruments across global markets.
Other Complementary Tools
| Funds Screener Find actively-traded funds from around the world traded on over 30 global exchanges | |
| Performance Analysis Check effects of mean-variance optimization against your current asset allocation | |
| Idea Optimizer Use advanced portfolio builder with pre-computed micro ideas to build optimal portfolio | |
| Portfolio Anywhere Track or share privately all of your investments from the convenience of any device | |
| Premium Stories Follow Macroaxis premium stories from verified contributors across different equity types, categories and coverage scope |