Correlation Between SP TSX and Dow Jones
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By analyzing existing cross correlation between SP TSX Composite and Dow Jones Industrial, you can compare the effects of market volatilities on SP TSX 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 SP TSX with a short position of Dow Jones. Check out your portfolio center. Please also check ongoing floating volatility patterns of SP TSX and Dow Jones.
Diversification Opportunities for SP TSX and Dow Jones
Almost no diversification
The 3 months correlation between GSPTSE and Dow is 0.94. Overlapping area represents the amount of risk that can be diversified away by holding SP TSX Composite 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 SP TSX 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 SP TSX Composite 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 SP TSX i.e., SP TSX and Dow Jones go up and down completely randomly.
Pair Corralation between SP TSX and Dow Jones
Assuming the 90 days trading horizon SP TSX Composite is expected to generate 0.7 times more return on investment than Dow Jones. However, SP TSX Composite is 1.42 times less risky than Dow Jones. It trades about 0.36 of its potential returns per unit of risk. Dow Jones Industrial is currently generating about -0.01 per unit of risk. If you would invest 2,478,930 in SP TSX Composite on September 12, 2024 and sell it today you would earn a total of 83,612 from holding SP TSX Composite or generate 3.37% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 91.3% |
| Values | Daily Returns |
SP TSX Composite vs. Dow Jones Industrial
Performance |
| Timeline |
SP TSX and Dow Jones Volatility Contrast
Predicted Return Density |
| Returns |
SP TSX Composite
Pair trading matchups for SP TSX
Dow Jones Industrial
Pair trading matchups for Dow Jones
Pair Trading with SP TSX and Dow Jones
The main advantage of trading using opposite SP TSX and Dow Jones positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if SP TSX 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.| SP TSX vs. Marimaca Copper Corp | SP TSX vs. Nova Leap Health | SP TSX vs. TUT Fitness Group | SP TSX vs. Canso Select Opportunities |
| Dow Jones vs. Aeye Inc | Dow Jones vs. Gentex | Dow Jones vs. Marine Products | Dow Jones vs. CarsalesCom Ltd ADR |
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 Portfolio Optimization module to compute new portfolio that will generate highest expected return given your specified tolerance for risk.
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