Correlation Between Dividend Performers and Dow Jones
Can any of the company-specific risk be diversified away by investing in both Dividend Performers 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 Dividend Performers and Dow Jones into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Dividend Performers ETF and Dow Jones Industrial, you can compare the effects of market volatilities on Dividend Performers 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 Dividend Performers with a short position of Dow Jones. Check out your portfolio center. Please also check ongoing floating volatility patterns of Dividend Performers and Dow Jones.
Diversification Opportunities for Dividend Performers and Dow Jones
0.96 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between Dividend and Dow is 0.96. Overlapping area represents the amount of risk that can be diversified away by holding Dividend Performers ETF 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 Dividend Performers 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 Dividend Performers ETF 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 Dividend Performers i.e., Dividend Performers and Dow Jones go up and down completely randomly.
Pair Corralation between Dividend Performers and Dow Jones
Given the investment horizon of 90 days Dividend Performers ETF is expected to generate 1.21 times more return on investment than Dow Jones. However, Dividend Performers is 1.21 times more volatile than Dow Jones Industrial. It trades about 0.14 of its potential returns per unit of risk. Dow Jones Industrial is currently generating about 0.16 per unit of risk. If you would invest 1,886 in Dividend Performers ETF on September 12, 2024 and sell it today you would earn a total of 146.00 from holding Dividend Performers ETF or generate 7.74% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Dividend Performers ETF vs. Dow Jones Industrial
Performance |
| Timeline |
Dividend Performers and Dow Jones Volatility Contrast
Predicted Return Density |
| Returns |
Dividend Performers ETF
Pair trading matchups for Dividend Performers
Dow Jones Industrial
Pair trading matchups for Dow Jones
Pair Trading with Dividend Performers and Dow Jones
The main advantage of trading using opposite Dividend Performers and Dow Jones positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Dividend Performers 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.| Dividend Performers vs. JPMorgan Equity Premium | Dividend Performers vs. Global X SP | Dividend Performers vs. Amplify CWP Enhanced | Dividend Performers vs. Global X Russell |
| Dow Jones vs. ChampionX | Dow Jones vs. Highway Holdings Limited | Dow Jones vs. Westinghouse Air Brake | Dow Jones vs. Cementos Pacasmayo SAA |
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 Latest Portfolios module to quick portfolio dashboard that showcases your latest portfolios.
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