Correlation Between Prologis and Dow Jones
Can any of the company-specific risk be diversified away by investing in both Prologis 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 Prologis and Dow Jones into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Prologis and Dow Jones Industrial, you can compare the effects of market volatilities on Prologis 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 Prologis with a short position of Dow Jones. Check out your portfolio center. Please also check ongoing floating volatility patterns of Prologis and Dow Jones.
Diversification Opportunities for Prologis and Dow Jones
Weak diversification
The 3 months correlation between Prologis and Dow is 0.34. Overlapping area represents the amount of risk that can be diversified away by holding Prologis 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 Prologis 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 Prologis 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 Prologis i.e., Prologis and Dow Jones go up and down completely randomly.
Pair Corralation between Prologis and Dow Jones
Assuming the 90 days trading horizon Prologis is expected to generate 3.91 times more return on investment than Dow Jones. However, Prologis is 3.91 times more volatile than Dow Jones Industrial. It trades about 0.16 of its potential returns per unit of risk. Dow Jones Industrial is currently generating about 0.42 per unit of risk. If you would invest 5,344 in Prologis on November 2, 2024 and sell it today you would earn a total of 497.00 from holding Prologis or generate 9.3% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 86.36% |
| Values | Daily Returns |
Prologis vs. Dow Jones Industrial
Performance |
| Timeline |
Prologis and Dow Jones Volatility Contrast
Predicted Return Density |
| Returns |
Prologis
Pair trading matchups for Prologis
Dow Jones Industrial
Pair trading matchups for Dow Jones
Pair Trading with Prologis and Dow Jones
The main advantage of trading using opposite Prologis and Dow Jones positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Prologis 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.| Prologis vs. Bank of America | Prologis vs. Broadridge Financial Solutions, | Prologis vs. Ameriprise Financial | Prologis vs. Eastman Chemical |
| Dow Jones vs. Boston Properties | Dow Jones vs. Suntory Beverage Food | Dow Jones vs. Envista Holdings Corp | Dow Jones vs. Fevertree Drinks Plc |
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 Rebalancing module to analyze risk-adjusted returns against different time horizons to find asset-allocation targets.
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