Correlation Between Predex Funds and Dow Jones
Can any of the company-specific risk be diversified away by investing in both Predex Funds 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 Predex Funds and Dow Jones into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Predex Funds and Dow Jones Industrial, you can compare the effects of market volatilities on Predex Funds 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 Predex Funds with a short position of Dow Jones. Check out your portfolio center. Please also check ongoing floating volatility patterns of Predex Funds and Dow Jones.
Diversification Opportunities for Predex Funds and Dow Jones
0.0 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between Predex and Dow is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding Predex Funds 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 Predex Funds 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 Predex Funds 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 Predex Funds i.e., Predex Funds and Dow Jones go up and down completely randomly.
Pair Corralation between Predex Funds and Dow Jones
Assuming the 90 days horizon Predex Funds is expected to under-perform the Dow Jones. But the mutual fund apears to be less risky and, when comparing its historical volatility, Predex Funds is 1.8 times less risky than Dow Jones. The mutual fund trades about -0.09 of its potential returns per unit of risk. The Dow Jones Industrial is currently generating about 0.07 of returns per unit of risk over similar time horizon. If you would invest 3,314,725 in Dow Jones Industrial on September 20, 2024 and sell it today you would earn a total of 917,962 from holding Dow Jones Industrial or generate 27.69% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Flat |
| Strength | Insignificant |
| Accuracy | 99.39% |
| Values | Daily Returns |
Predex Funds vs. Dow Jones Industrial
Performance |
| Timeline |
Predex Funds and Dow Jones Volatility Contrast
Predicted Return Density |
| Returns |
Predex Funds
Pair trading matchups for Predex Funds
Dow Jones Industrial
Pair trading matchups for Dow Jones
Pair Trading with Predex Funds and Dow Jones
The main advantage of trading using opposite Predex Funds and Dow Jones positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Predex Funds 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.| Predex Funds vs. Ab Global Bond | Predex Funds vs. 361 Global Longshort | Predex Funds vs. Barings Global Floating | Predex Funds vs. Ab Global Risk |
| Dow Jones vs. Digi International | Dow Jones vs. Grupo Televisa SAB | Dow Jones vs. United Microelectronics | Dow Jones vs. Weibo Corp |
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 Pair Correlation module to compare performance and examine fundamental relationship between any two equity instruments.
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