Correlation Between Laudus Us and Dow Jones
Can any of the company-specific risk be diversified away by investing in both Laudus Us 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 Laudus Us and Dow Jones into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Laudus Large Cap and Dow Jones Industrial, you can compare the effects of market volatilities on Laudus Us 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 Laudus Us with a short position of Dow Jones. Check out your portfolio center. Please also check ongoing floating volatility patterns of Laudus Us and Dow Jones.
Diversification Opportunities for Laudus Us and Dow Jones
Almost no diversification
The 3 months correlation between Laudus and Dow is 0.94. Overlapping area represents the amount of risk that can be diversified away by holding Laudus Large Cap 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 Laudus Us 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 Laudus Large Cap 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 Laudus Us i.e., Laudus Us and Dow Jones go up and down completely randomly.
Pair Corralation between Laudus Us and Dow Jones
Assuming the 90 days horizon Laudus Us is expected to generate 1.03 times less return on investment than Dow Jones. In addition to that, Laudus Us is 1.98 times more volatile than Dow Jones Industrial. It trades about 0.05 of its total potential returns per unit of risk. Dow Jones Industrial is currently generating about 0.1 per unit of volatility. If you would invest 3,528,252 in Dow Jones Industrial on August 26, 2024 and sell it today you would earn a total of 901,399 from holding Dow Jones Industrial or generate 25.55% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Laudus Large Cap vs. Dow Jones Industrial
Performance |
| Timeline |
Laudus Us and Dow Jones Volatility Contrast
Predicted Return Density |
| Returns |
Laudus Large Cap
Pair trading matchups for Laudus Us
Dow Jones Industrial
Pair trading matchups for Dow Jones
Pair Trading with Laudus Us and Dow Jones
The main advantage of trading using opposite Laudus Us and Dow Jones positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Laudus Us 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.| Laudus Us vs. Multi Manager High Yield | Laudus Us vs. Guggenheim High Yield | Laudus Us vs. Prudential High Yield | Laudus Us vs. Gmo High Yield |
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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 Aroon Oscillator module to analyze current equity momentum using Aroon Oscillator and other momentum ratios.
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