Correlation Between Strategy Shares and Dow Jones
Can any of the company-specific risk be diversified away by investing in both Strategy Shares 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 Strategy Shares and Dow Jones into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Strategy Shares NewfoundReSolve and Dow Jones Industrial, you can compare the effects of market volatilities on Strategy Shares 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 Strategy Shares with a short position of Dow Jones. Check out your portfolio center. Please also check ongoing floating volatility patterns of Strategy Shares and Dow Jones.
Diversification Opportunities for Strategy Shares and Dow Jones
0.96 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between Strategy and Dow is 0.96. Overlapping area represents the amount of risk that can be diversified away by holding Strategy Shares NewfoundReSolv 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 Strategy Shares 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 Strategy Shares NewfoundReSolve 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 Strategy Shares i.e., Strategy Shares and Dow Jones go up and down completely randomly.
Pair Corralation between Strategy Shares and Dow Jones
Given the investment horizon of 90 days Strategy Shares is expected to generate 1.32 times less return on investment than Dow Jones. In addition to that, Strategy Shares is 1.05 times more volatile than Dow Jones Industrial. It trades about 0.11 of its total potential returns per unit of risk. Dow Jones Industrial is currently generating about 0.15 per unit of volatility. If you would invest 3,868,632 in Dow Jones Industrial on August 29, 2024 and sell it today you would earn a total of 603,574 from holding Dow Jones Industrial or generate 15.6% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Strategy Shares NewfoundReSolv vs. Dow Jones Industrial
Performance |
| Timeline |
Strategy Shares and Dow Jones Volatility Contrast
Predicted Return Density |
| Returns |
Strategy Shares NewfoundReSolve
Pair trading matchups for Strategy Shares
Dow Jones Industrial
Pair trading matchups for Dow Jones
Pair Trading with Strategy Shares and Dow Jones
The main advantage of trading using opposite Strategy Shares and Dow Jones positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Strategy Shares 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.| Strategy Shares vs. Cambria Trinity ETF | Strategy Shares vs. Northern Lights | Strategy Shares vs. Cambria Global Momentum | Strategy Shares vs. Alpha Architect Value |
| 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 Positions Ratings module to determine portfolio positions ratings based on digital equity recommendations. Macroaxis instant position ratings are based on combination of fundamental analysis and risk-adjusted market performance.
Other Complementary Tools
| Equity Analysis Research over 250,000 global equities including funds, stocks and ETFs to find investment opportunities | |
| Earnings Calls Check upcoming earnings announcements updated hourly across public exchanges | |
| ETFs Find actively traded Exchange Traded Funds (ETF) from around the world | |
| Fundamentals Comparison Compare fundamentals across multiple equities to find investing opportunities | |
| Technical Analysis Check basic technical indicators and analysis based on most latest market data |