Correlation Between SPDR Bloomberg and Dow Jones
Can any of the company-specific risk be diversified away by investing in both SPDR Bloomberg 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 SPDR Bloomberg and Dow Jones into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between SPDR Bloomberg High and Dow Jones Industrial, you can compare the effects of market volatilities on SPDR Bloomberg 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 SPDR Bloomberg with a short position of Dow Jones. Check out your portfolio center. Please also check ongoing floating volatility patterns of SPDR Bloomberg and Dow Jones.
Diversification Opportunities for SPDR Bloomberg and Dow Jones
0.77 | Correlation Coefficient |
Poor diversification
The 3 months correlation between SPDR and Dow is 0.77. Overlapping area represents the amount of risk that can be diversified away by holding SPDR Bloomberg High 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 SPDR Bloomberg 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 SPDR Bloomberg High 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 SPDR Bloomberg i.e., SPDR Bloomberg and Dow Jones go up and down completely randomly.
Pair Corralation between SPDR Bloomberg and Dow Jones
Considering the 90-day investment horizon SPDR Bloomberg is expected to generate 4.15 times less return on investment than Dow Jones. But when comparing it to its historical volatility, SPDR Bloomberg High is 4.5 times less risky than Dow Jones. It trades about 0.21 of its potential returns per unit of risk. Dow Jones Industrial is currently generating about 0.19 of returns per unit of risk over similar time horizon. If you would invest 4,251,495 in Dow Jones Industrial on August 24, 2024 and sell it today you would earn a total of 178,156 from holding Dow Jones Industrial or generate 4.19% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
SPDR Bloomberg High vs. Dow Jones Industrial
Performance |
| Timeline |
SPDR Bloomberg and Dow Jones Volatility Contrast
Predicted Return Density |
| Returns |
SPDR Bloomberg High
Pair trading matchups for SPDR Bloomberg
Dow Jones Industrial
Pair trading matchups for Dow Jones
Pair Trading with SPDR Bloomberg and Dow Jones
The main advantage of trading using opposite SPDR Bloomberg and Dow Jones positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if SPDR Bloomberg 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.| SPDR Bloomberg vs. iShares iBoxx High | SPDR Bloomberg vs. iShares iBoxx Investment | SPDR Bloomberg vs. iShares JP Morgan | SPDR Bloomberg vs. iShares TIPS Bond |
| Dow Jones vs. Sphere Entertainment Co | Dow Jones vs. Perseus Mining Limited | Dow Jones vs. Titan Machinery | Dow Jones vs. Simon Property Group |
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 AI Portfolio Architect module to use AI to generate optimal portfolios and find profitable investment opportunities.
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