Correlation Between ETRACS IFED and Dow Jones
Can any of the company-specific risk be diversified away by investing in both ETRACS IFED 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 ETRACS IFED and Dow Jones into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between ETRACS IFED Invest and Dow Jones Industrial, you can compare the effects of market volatilities on ETRACS IFED 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 ETRACS IFED with a short position of Dow Jones. Check out your portfolio center. Please also check ongoing floating volatility patterns of ETRACS IFED and Dow Jones.
Diversification Opportunities for ETRACS IFED and Dow Jones
0.97 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between ETRACS and Dow is 0.97. Overlapping area represents the amount of risk that can be diversified away by holding ETRACS IFED Invest 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 ETRACS IFED 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 ETRACS IFED Invest 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 ETRACS IFED i.e., ETRACS IFED and Dow Jones go up and down completely randomly.
Pair Corralation between ETRACS IFED and Dow Jones
Given the investment horizon of 90 days ETRACS IFED Invest is expected to generate 1.47 times more return on investment than Dow Jones. However, ETRACS IFED is 1.47 times more volatile than Dow Jones Industrial. It trades about 0.09 of its potential returns per unit of risk. Dow Jones Industrial is currently generating about 0.08 per unit of risk. If you would invest 2,781 in ETRACS IFED Invest on August 30, 2024 and sell it today you would earn a total of 1,475 from holding ETRACS IFED Invest or generate 53.04% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
ETRACS IFED Invest vs. Dow Jones Industrial
Performance |
| Timeline |
ETRACS IFED and Dow Jones Volatility Contrast
Predicted Return Density |
| Returns |
ETRACS IFED Invest
Pair trading matchups for ETRACS IFED
Dow Jones Industrial
Pair trading matchups for Dow Jones
Pair Trading with ETRACS IFED and Dow Jones
The main advantage of trading using opposite ETRACS IFED and Dow Jones positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if ETRACS IFED 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.| ETRACS IFED vs. Freedom Day Dividend | ETRACS IFED vs. Franklin Templeton ETF | ETRACS IFED vs. iShares MSCI China | ETRACS IFED vs. Tidal Trust II |
| Dow Jones vs. Kaltura | Dow Jones vs. Artisan Partners Asset | Dow Jones vs. US Global Investors | Dow Jones vs. Analog Devices |
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 Performance Analysis module to check effects of mean-variance optimization against your current asset allocation.
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