Correlation Between BetaShares Legg and Dow Jones
Can any of the company-specific risk be diversified away by investing in both BetaShares Legg 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 BetaShares Legg and Dow Jones into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between BetaShares Legg Mason and Dow Jones Industrial, you can compare the effects of market volatilities on BetaShares Legg 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 BetaShares Legg with a short position of Dow Jones. Check out your portfolio center. Please also check ongoing floating volatility patterns of BetaShares Legg and Dow Jones.
Diversification Opportunities for BetaShares Legg and Dow Jones
0.26 | Correlation Coefficient |
Modest diversification
The 3 months correlation between BetaShares and Dow is 0.26. Overlapping area represents the amount of risk that can be diversified away by holding BetaShares Legg Mason 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 BetaShares Legg 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 BetaShares Legg Mason 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 BetaShares Legg i.e., BetaShares Legg and Dow Jones go up and down completely randomly.
Pair Corralation between BetaShares Legg and Dow Jones
Assuming the 90 days trading horizon BetaShares Legg Mason is expected to generate 150.84 times more return on investment than Dow Jones. However, BetaShares Legg is 150.84 times more volatile than Dow Jones Industrial. It trades about 0.1 of its potential returns per unit of risk. Dow Jones Industrial is currently generating about 0.1 per unit of risk. If you would invest 824.00 in BetaShares Legg Mason on August 26, 2024 and sell it today you would earn a total of 7,905 from holding BetaShares Legg Mason or generate 959.34% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 97.94% |
| Values | Daily Returns |
BetaShares Legg Mason vs. Dow Jones Industrial
Performance |
| Timeline |
BetaShares Legg and Dow Jones Volatility Contrast
Predicted Return Density |
| Returns |
BetaShares Legg Mason
Pair trading matchups for BetaShares Legg
Dow Jones Industrial
Pair trading matchups for Dow Jones
Pair Trading with BetaShares Legg and Dow Jones
The main advantage of trading using opposite BetaShares Legg and Dow Jones positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if BetaShares Legg 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.| BetaShares Legg vs. BetaShares Cloud Computing | BetaShares Legg vs. BetaShares Australian EquitiesBear | BetaShares Legg vs. BetaShares Australian Investment | BetaShares Legg vs. BetaShares Diversified High |
| Dow Jones vs. Vistra Energy Corp | Dow Jones vs. Fluence Energy | Dow Jones vs. Old Republic International | Dow Jones vs. Empresa Distribuidora y |
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 Efficient Frontier module to plot and analyze your portfolio and positions against risk-return landscape of the market..
Other Complementary Tools
| Sign In To Macroaxis Sign in to explore Macroaxis' wealth optimization platform and fintech modules | |
| Portfolio Analyzer Portfolio analysis module that provides access to portfolio diagnostics and optimization engine | |
| Risk-Return Analysis View associations between returns expected from investment and the risk you assume | |
| Price Exposure Probability Analyze equity upside and downside potential for a given time horizon across multiple markets | |
| Correlation Analysis Reduce portfolio risk simply by holding instruments which are not perfectly correlated |