Correlation Between Swan Defined and Dow Jones
Can any of the company-specific risk be diversified away by investing in both Swan Defined 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 Swan Defined and Dow Jones into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Swan Defined Risk and Dow Jones Industrial, you can compare the effects of market volatilities on Swan Defined 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 Swan Defined with a short position of Dow Jones. Check out your portfolio center. Please also check ongoing floating volatility patterns of Swan Defined and Dow Jones.
Diversification Opportunities for Swan Defined and Dow Jones
0.96 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between Swan and Dow is 0.96. Overlapping area represents the amount of risk that can be diversified away by holding Swan Defined Risk 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 Swan Defined 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 Swan Defined Risk 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 Swan Defined i.e., Swan Defined and Dow Jones go up and down completely randomly.
Pair Corralation between Swan Defined and Dow Jones
Assuming the 90 days horizon Swan Defined Risk is expected to under-perform the Dow Jones. But the mutual fund apears to be less risky and, when comparing its historical volatility, Swan Defined Risk is 1.54 times less risky than Dow Jones. The mutual fund trades about -0.01 of its potential returns per unit of risk. The Dow Jones Industrial is currently generating about -0.01 of returns per unit of risk over similar time horizon. If you would invest 4,429,313 in Dow Jones Industrial on September 12, 2024 and sell it today you would lose (4,530) from holding Dow Jones Industrial or give up 0.1% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Swan Defined Risk vs. Dow Jones Industrial
Performance |
| Timeline |
Swan Defined and Dow Jones Volatility Contrast
Predicted Return Density |
| Returns |
Swan Defined Risk
Pair trading matchups for Swan Defined
Dow Jones Industrial
Pair trading matchups for Dow Jones
Pair Trading with Swan Defined and Dow Jones
The main advantage of trading using opposite Swan Defined and Dow Jones positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Swan Defined 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.| Swan Defined vs. California High Yield Municipal | Swan Defined vs. Oklahoma Municipal Fund | Swan Defined vs. Franklin High Yield | Swan Defined vs. Ishares Municipal Bond |
| Dow Jones vs. Aeye Inc | Dow Jones vs. Gentex | Dow Jones vs. Marine Products | Dow Jones vs. CarsalesCom Ltd ADR |
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 Bonds Directory module to find actively traded corporate debentures issued by US companies.
Other Complementary Tools
| Money Flow Index Determine momentum by analyzing Money Flow Index and other technical indicators | |
| Portfolio File Import Quickly import all of your third-party portfolios from your local drive in csv format | |
| Balance Of Power Check stock momentum by analyzing Balance Of Power indicator and other technical ratios | |
| Idea Analyzer Analyze all characteristics, volatility and risk-adjusted return of Macroaxis ideas | |
| Cryptocurrency Center Build and monitor diversified portfolio of extremely risky digital assets and cryptocurrency |