Correlation Between DBX ETF and Dow Jones
Can any of the company-specific risk be diversified away by investing in both DBX 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 DBX 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 DBX ETF Trust and Dow Jones Industrial, you can compare the effects of market volatilities on DBX 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 DBX ETF with a short position of Dow Jones. Check out your portfolio center. Please also check ongoing floating volatility patterns of DBX ETF and Dow Jones.
Diversification Opportunities for DBX ETF and Dow Jones
No risk reduction
The 3 months correlation between DBX and Dow is 0.99. Overlapping area represents the amount of risk that can be diversified away by holding DBX 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 DBX 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 DBX 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 DBX ETF i.e., DBX ETF and Dow Jones go up and down completely randomly.
Pair Corralation between DBX ETF and Dow Jones
Given the investment horizon of 90 days DBX ETF is expected to generate 1.2 times less return on investment than Dow Jones. But when comparing it to its historical volatility, DBX ETF Trust is 1.43 times less risky than Dow Jones. It trades about 0.43 of its potential returns per unit of risk. Dow Jones Industrial is currently generating about 0.37 of returns per unit of risk over similar time horizon. If you would invest 4,179,460 in Dow Jones Industrial on September 4, 2024 and sell it today you would earn a total of 298,740 from holding Dow Jones Industrial or generate 7.15% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 95.24% |
| Values | Daily Returns |
DBX ETF Trust vs. Dow Jones Industrial
Performance |
| Timeline |
DBX ETF and Dow Jones Volatility Contrast
Predicted Return Density |
| Returns |
DBX ETF Trust
Pair trading matchups for DBX ETF
Dow Jones Industrial
Pair trading matchups for Dow Jones
Pair Trading with DBX ETF and Dow Jones
The main advantage of trading using opposite DBX ETF and Dow Jones positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if DBX 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.| DBX ETF vs. Vanguard Total Stock | DBX ETF vs. SPDR SP 500 | DBX ETF vs. iShares Core SP | DBX ETF vs. Vanguard Dividend Appreciation |
| Dow Jones vs. Gentex | Dow Jones vs. American Axle Manufacturing | Dow Jones vs. Pearson PLC ADR | Dow Jones vs. Marine Products |
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 Forecasting module to use basic forecasting models to generate price predictions and determine price momentum.
Other Complementary Tools
| Piotroski F Score Get Piotroski F Score based on the binary analysis strategy of nine different fundamentals | |
| Bonds Directory Find actively traded corporate debentures issued by US companies | |
| Earnings Calls Check upcoming earnings announcements updated hourly across public exchanges | |
| Portfolio Backtesting Avoid under-diversification and over-optimization by backtesting your portfolios | |
| Theme Ratings Determine theme ratings based on digital equity recommendations. Macroaxis theme ratings are based on combination of fundamental analysis and risk-adjusted market performance |