Correlation Between Sextant Growth and Dow Jones
Can any of the company-specific risk be diversified away by investing in both Sextant Growth 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 Sextant Growth and Dow Jones into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Sextant Growth Fund and Dow Jones Industrial, you can compare the effects of market volatilities on Sextant Growth 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 Sextant Growth with a short position of Dow Jones. Check out your portfolio center. Please also check ongoing floating volatility patterns of Sextant Growth and Dow Jones.
Diversification Opportunities for Sextant Growth and Dow Jones
0.92 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between Sextant and Dow is 0.92. Overlapping area represents the amount of risk that can be diversified away by holding Sextant Growth Fund 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 Sextant Growth 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 Sextant Growth Fund 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 Sextant Growth i.e., Sextant Growth and Dow Jones go up and down completely randomly.
Pair Corralation between Sextant Growth and Dow Jones
Assuming the 90 days horizon Sextant Growth Fund is expected to generate 1.08 times more return on investment than Dow Jones. However, Sextant Growth is 1.08 times more volatile than Dow Jones Industrial. It trades about 0.15 of its potential returns per unit of risk. Dow Jones Industrial is currently generating about 0.08 per unit of risk. If you would invest 5,572 in Sextant Growth Fund on September 13, 2024 and sell it today you would earn a total of 308.00 from holding Sextant Growth Fund or generate 5.53% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 97.67% |
| Values | Daily Returns |
Sextant Growth Fund vs. Dow Jones Industrial
Performance |
| Timeline |
Sextant Growth and Dow Jones Volatility Contrast
Predicted Return Density |
| Returns |
Sextant Growth Fund
Pair trading matchups for Sextant Growth
Dow Jones Industrial
Pair trading matchups for Dow Jones
Pair Trading with Sextant Growth and Dow Jones
The main advantage of trading using opposite Sextant Growth and Dow Jones positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Sextant Growth 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.| Sextant Growth vs. Sextant International Fund | Sextant Growth vs. Sextant Bond Income | Sextant Growth vs. Teton Westwood Equity | Sextant Growth vs. Value Line Premier |
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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 Pair Correlation module to compare performance and examine fundamental relationship between any two equity instruments.
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