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
Very poor diversification
The 3 months correlation between DBX and Dow is 0.88. 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 Trust is expected to generate 0.89 times more return on investment than Dow Jones. However, DBX ETF Trust is 1.13 times less risky than Dow Jones. It trades about 0.2 of its potential returns per unit of risk. Dow Jones Industrial is currently generating about 0.17 per unit of risk. If you would invest 5,203 in DBX ETF Trust on October 20, 2024 and sell it today you would earn a total of 140.00 from holding DBX ETF Trust or generate 2.69% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | 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. SPDR MSCI USA | DBX ETF vs. American Century STOXX | DBX ETF vs. Hartford Multifactor Equity | DBX ETF vs. PIMCO RAFI Dynamic |
| Dow Jones vs. SkyWest | Dow Jones vs. Air Transport Services | Dow Jones vs. LATAM Airlines Group | Dow Jones vs. Emerson Radio |
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 Holdings module to check your current holdings and cash postion to detemine if your portfolio needs rebalancing.
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