Correlation Between Performance Trust and Dow Jones
Can any of the company-specific risk be diversified away by investing in both Performance Trust 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 Performance Trust and Dow Jones into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Performance Trust Municipal and Dow Jones Industrial, you can compare the effects of market volatilities on Performance Trust 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 Performance Trust with a short position of Dow Jones. Check out your portfolio center. Please also check ongoing floating volatility patterns of Performance Trust and Dow Jones.
Diversification Opportunities for Performance Trust and Dow Jones
-0.42 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Performance and Dow is -0.42. Overlapping area represents the amount of risk that can be diversified away by holding Performance Trust Municipal 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 Performance Trust 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 Performance Trust Municipal 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 Performance Trust i.e., Performance Trust and Dow Jones go up and down completely randomly.
Pair Corralation between Performance Trust and Dow Jones
Assuming the 90 days horizon Performance Trust is expected to generate 4.02 times less return on investment than Dow Jones. But when comparing it to its historical volatility, Performance Trust Municipal is 2.57 times less risky than Dow Jones. It trades about 0.17 of its potential returns per unit of risk. Dow Jones Industrial is currently generating about 0.27 of returns per unit of risk over similar time horizon. If you would invest 4,223,305 in Dow Jones Industrial on August 30, 2024 and sell it today you would earn a total of 248,901 from holding Dow Jones Industrial or generate 5.89% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Performance Trust Municipal vs. Dow Jones Industrial
Performance |
| Timeline |
Performance Trust and Dow Jones Volatility Contrast
Predicted Return Density |
| Returns |
Performance Trust Municipal
Pair trading matchups for Performance Trust
Dow Jones Industrial
Pair trading matchups for Dow Jones
Pair Trading with Performance Trust and Dow Jones
The main advantage of trading using opposite Performance Trust and Dow Jones positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Performance Trust 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.| Performance Trust vs. Performance Trust Municipal | Performance Trust vs. Performance Trust Strategic | Performance Trust vs. Guggenheim Investment Grade | Performance Trust vs. Nuveen High Yield |
| Dow Jones vs. Kaltura | Dow Jones vs. Artisan Partners Asset | Dow Jones vs. US Global Investors | Dow Jones vs. Analog Devices |
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 Idea Breakdown module to analyze constituents of all Macroaxis ideas. Macroaxis investment ideas are predefined, sector-focused investing themes.
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