Correlation Between Nasdaq Benchmark and Dow Jones
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By analyzing existing cross correlation between Nasdaq Benchmark Energy and Dow Jones Industrial, you can compare the effects of market volatilities on Nasdaq Benchmark 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 Nasdaq Benchmark with a short position of Dow Jones. Check out your portfolio center. Please also check ongoing floating volatility patterns of Nasdaq Benchmark and Dow Jones.
Diversification Opportunities for Nasdaq Benchmark and Dow Jones
0.75 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Nasdaq and Dow is 0.75. Overlapping area represents the amount of risk that can be diversified away by holding Nasdaq Benchmark Energy 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 Nasdaq Benchmark 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 Nasdaq Benchmark Energy 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 Nasdaq Benchmark i.e., Nasdaq Benchmark and Dow Jones go up and down completely randomly.
Pair Corralation between Nasdaq Benchmark and Dow Jones
Assuming the 90 days trading horizon Nasdaq Benchmark Energy is expected to under-perform the Dow Jones. In addition to that, Nasdaq Benchmark is 1.52 times more volatile than Dow Jones Industrial. It trades about -0.01 of its total potential returns per unit of risk. Dow Jones Industrial is currently generating about 0.11 per unit of volatility. If you would invest 3,915,033 in Dow Jones Industrial on September 19, 2024 and sell it today you would earn a total of 429,957 from holding Dow Jones Industrial or generate 10.98% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Nasdaq Benchmark Energy vs. Dow Jones Industrial
Performance |
| Timeline |
Nasdaq Benchmark and Dow Jones Volatility Contrast
Predicted Return Density |
| Returns |
Nasdaq Benchmark Energy
Pair trading matchups for Nasdaq Benchmark
Dow Jones Industrial
Pair trading matchups for Dow Jones
Pair Trading with Nasdaq Benchmark and Dow Jones
The main advantage of trading using opposite Nasdaq Benchmark and Dow Jones positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Nasdaq Benchmark 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.| Nasdaq Benchmark vs. Radcom | Nasdaq Benchmark vs. Ziff Davis | Nasdaq Benchmark vs. Sphere Entertainment Co | Nasdaq Benchmark vs. WiMi Hologram Cloud |
| Dow Jones vs. Mangazeya Mining | Dow Jones vs. Summit Materials | Dow Jones vs. Perseus Mining Limited | Dow Jones vs. AMCON Distributing |
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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