Correlation Between NuShares ETF and Dow Jones
Can any of the company-specific risk be diversified away by investing in both NuShares ETF 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 NuShares ETF and Dow Jones into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between NuShares ETF Trust and Dow Jones Industrial, you can compare the effects of market volatilities on NuShares ETF 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 NuShares ETF with a short position of Dow Jones. Check out your portfolio center. Please also check ongoing floating volatility patterns of NuShares ETF and Dow Jones.
Diversification Opportunities for NuShares ETF and Dow Jones
0.46 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between NuShares and Dow is 0.46. Overlapping area represents the amount of risk that can be diversified away by holding NuShares ETF Trust 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 NuShares ETF 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 NuShares ETF Trust 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 NuShares ETF i.e., NuShares ETF and Dow Jones go up and down completely randomly.
Pair Corralation between NuShares ETF and Dow Jones
Given the investment horizon of 90 days NuShares ETF is expected to generate 1.39 times less return on investment than Dow Jones. In addition to that, NuShares ETF is 1.88 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 0.12 per unit of volatility. If you would invest 3,595,089 in Dow Jones Industrial on August 26, 2024 and sell it today you would earn a total of 834,562 from holding Dow Jones Industrial or generate 23.21% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
NuShares ETF Trust vs. Dow Jones Industrial
Performance |
| Timeline |
NuShares ETF and Dow Jones Volatility Contrast
Predicted Return Density |
| Returns |
NuShares ETF Trust
Pair trading matchups for NuShares ETF
Dow Jones Industrial
Pair trading matchups for Dow Jones
Pair Trading with NuShares ETF and Dow Jones
The main advantage of trading using opposite NuShares ETF and Dow Jones positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if NuShares ETF 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.| NuShares ETF vs. Invesco PureBeta MSCI | NuShares ETF vs. Aquagold International | NuShares ETF vs. Morningstar Unconstrained Allocation | NuShares ETF vs. High Yield Municipal Fund |
| Dow Jones vs. MI Homes | Dow Jones vs. Franklin Street Properties | Dow Jones vs. Summit Hotel Properties | Dow Jones vs. Portillos |
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 Bollinger Bands module to use Bollinger Bands indicator to analyze target price for a given investing horizon.
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