Correlation Between VanEck Circular and Dow Jones
Can any of the company-specific risk be diversified away by investing in both VanEck Circular 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 VanEck Circular and Dow Jones into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between VanEck Circular Economy and Dow Jones Industrial, you can compare the effects of market volatilities on VanEck Circular 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 VanEck Circular with a short position of Dow Jones. Check out your portfolio center. Please also check ongoing floating volatility patterns of VanEck Circular and Dow Jones.
Diversification Opportunities for VanEck Circular and Dow Jones
0.86 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between VanEck and Dow is 0.86. Overlapping area represents the amount of risk that can be diversified away by holding VanEck Circular Economy 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 VanEck Circular 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 VanEck Circular Economy 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 VanEck Circular i.e., VanEck Circular and Dow Jones go up and down completely randomly.
Pair Corralation between VanEck Circular and Dow Jones
Assuming the 90 days trading horizon VanEck Circular is expected to generate 1.57 times less return on investment than Dow Jones. In addition to that, VanEck Circular is 1.01 times more volatile than Dow Jones Industrial. It trades about 0.13 of its total potential returns per unit of risk. Dow Jones Industrial is currently generating about 0.2 per unit of volatility. If you would invest 4,093,693 in Dow Jones Industrial on September 3, 2024 and sell it today you would earn a total of 397,372 from holding Dow Jones Industrial or generate 9.71% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 98.46% |
| Values | Daily Returns |
VanEck Circular Economy vs. Dow Jones Industrial
Performance |
| Timeline |
VanEck Circular and Dow Jones Volatility Contrast
Predicted Return Density |
| Returns |
VanEck Circular Economy
Pair trading matchups for VanEck Circular
Dow Jones Industrial
Pair trading matchups for Dow Jones
Pair Trading with VanEck Circular and Dow Jones
The main advantage of trading using opposite VanEck Circular and Dow Jones positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if VanEck Circular 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.| VanEck Circular vs. VanEck Crypto Blockchain | VanEck Circular vs. VanEck Morningstar SMID | VanEck Circular vs. VanEck New China | VanEck Circular vs. VanEck Hydrogen Economy |
| Dow Jones vs. Eastern Co | Dow Jones vs. Uber Technologies | Dow Jones vs. AKITA Drilling | Dow Jones vs. Chemours Co |
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 Watchlist Optimization module to optimize watchlists to build efficient portfolios or rebalance existing positions based on the mean-variance optimization algorithm.
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