Correlation Between ETFis Series and Dow Jones
Can any of the company-specific risk be diversified away by investing in both ETFis Series 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 ETFis Series and Dow Jones into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between ETFis Series Trust and Dow Jones Industrial, you can compare the effects of market volatilities on ETFis Series 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 ETFis Series with a short position of Dow Jones. Check out your portfolio center. Please also check ongoing floating volatility patterns of ETFis Series and Dow Jones.
Diversification Opportunities for ETFis Series and Dow Jones
0.47 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between ETFis and Dow is 0.47. Overlapping area represents the amount of risk that can be diversified away by holding ETFis Series 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 ETFis Series 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 ETFis Series 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 ETFis Series i.e., ETFis Series and Dow Jones go up and down completely randomly.
Pair Corralation between ETFis Series and Dow Jones
Given the investment horizon of 90 days ETFis Series is expected to generate 1.34 times less return on investment than Dow Jones. But when comparing it to its historical volatility, ETFis Series Trust is 1.3 times less risky than Dow Jones. It trades about 0.12 of its potential returns per unit of risk. Dow Jones Industrial is currently generating about 0.12 of returns per unit of risk over similar time horizon. 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 |
ETFis Series Trust vs. Dow Jones Industrial
Performance |
| Timeline |
ETFis Series and Dow Jones Volatility Contrast
Predicted Return Density |
| Returns |
ETFis Series Trust
Pair trading matchups for ETFis Series
Dow Jones Industrial
Pair trading matchups for Dow Jones
Pair Trading with ETFis Series and Dow Jones
The main advantage of trading using opposite ETFis Series and Dow Jones positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if ETFis Series 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.| ETFis Series vs. ETF Series Solutions | ETFis Series vs. Aquagold International | ETFis Series vs. Morningstar Unconstrained Allocation | ETFis Series vs. High Yield Municipal Fund |
| Dow Jones vs. Vistra Energy Corp | Dow Jones vs. Fluence Energy | Dow Jones vs. Old Republic International | Dow Jones vs. Empresa Distribuidora y |
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 Equity Search module to search for actively traded equities including funds and ETFs from over 30 global markets.
Other Complementary Tools
| Portfolio Optimization Compute new portfolio that will generate highest expected return given your specified tolerance for risk | |
| Price Exposure Probability Analyze equity upside and downside potential for a given time horizon across multiple markets | |
| Premium Stories Follow Macroaxis premium stories from verified contributors across different equity types, categories and coverage scope | |
| AI Portfolio Architect Use AI to generate optimal portfolios and find profitable investment opportunities | |
| Price Ceiling Movement Calculate and plot Price Ceiling Movement for different equity instruments |