Correlation Between SP Funds and Dow Jones
Can any of the company-specific risk be diversified away by investing in both SP Funds 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 SP Funds and Dow Jones into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between SP Funds Dow and Dow Jones Industrial, you can compare the effects of market volatilities on SP Funds 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 SP Funds with a short position of Dow Jones. Check out your portfolio center. Please also check ongoing floating volatility patterns of SP Funds and Dow Jones.
Diversification Opportunities for SP Funds and Dow Jones
Excellent diversification
The 3 months correlation between SPSK and Dow is -0.53. Overlapping area represents the amount of risk that can be diversified away by holding SP Funds Dow 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 SP Funds 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 SP Funds Dow 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 SP Funds i.e., SP Funds and Dow Jones go up and down completely randomly.
Pair Corralation between SP Funds and Dow Jones
Given the investment horizon of 90 days SP Funds Dow is expected to generate 0.13 times more return on investment than Dow Jones. However, SP Funds Dow is 7.42 times less risky than Dow Jones. It trades about -0.09 of its potential returns per unit of risk. Dow Jones Industrial is currently generating about -0.05 per unit of risk. If you would invest 1,795 in SP Funds Dow on January 9, 2025 and sell it today you would lose (12.00) from holding SP Funds Dow or give up 0.67% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
SP Funds Dow vs. Dow Jones Industrial
Performance |
| Timeline |
SP Funds and Dow Jones Volatility Contrast
Predicted Return Density |
| Returns |
SP Funds Dow
Pair trading matchups for SP Funds
Dow Jones Industrial
Pair trading matchups for Dow Jones
Pair Trading with SP Funds and Dow Jones
The main advantage of trading using opposite SP Funds and Dow Jones positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if SP Funds 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.| SP Funds vs. JPMorgan USD Emerging | SP Funds vs. JPMorgan Ultra Short Municipal | SP Funds vs. JPMorgan Core Plus | SP Funds vs. American Century Diversified |
| Dow Jones vs. Life Time Group | Dow Jones vs. Emerson Radio | Dow Jones vs. Eastern Co | Dow Jones vs. Mid Atlantic Home Health |
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 Top Crypto Exchanges module to search and analyze digital assets across top global cryptocurrency exchanges.
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