Correlation Between VelocityShares and Dow Jones
Can any of the company-specific risk be diversified away by investing in both VelocityShares 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 VelocityShares and Dow Jones into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between VelocityShares 3x Long and Dow Jones Industrial, you can compare the effects of market volatilities on VelocityShares 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 VelocityShares with a short position of Dow Jones. Check out your portfolio center. Please also check ongoing floating volatility patterns of VelocityShares and Dow Jones.
Diversification Opportunities for VelocityShares and Dow Jones
-0.64 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between VelocityShares and Dow is -0.64. Overlapping area represents the amount of risk that can be diversified away by holding VelocityShares 3x Long 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 VelocityShares 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 VelocityShares 3x Long 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 VelocityShares i.e., VelocityShares and Dow Jones go up and down completely randomly.
Pair Corralation between VelocityShares and Dow Jones
If you would invest 4,176,346 in Dow Jones Industrial on September 1, 2024 and sell it today you would earn a total of 314,719 from holding Dow Jones Industrial or generate 7.54% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 4.76% |
| Values | Daily Returns |
VelocityShares 3x Long vs. Dow Jones Industrial
Performance |
| Timeline |
VelocityShares and Dow Jones Volatility Contrast
Predicted Return Density |
| Returns |
Dow Jones Industrial
Pair trading matchups for Dow Jones
Pair Trading with VelocityShares and Dow Jones
The main advantage of trading using opposite VelocityShares and Dow Jones positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if VelocityShares 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.The idea behind VelocityShares 3x Long and Dow Jones Industrial pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.| Dow Jones vs. Catalyst Pharmaceuticals | Dow Jones vs. Sphere Entertainment Co | Dow Jones vs. National CineMedia | Dow Jones vs. Mink Therapeutics |
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 Sectors module to list of equity sectors categorizing publicly traded companies based on their primary business activities.
Other Complementary Tools
| Portfolio Holdings Check your current holdings and cash postion to detemine if your portfolio needs rebalancing | |
| Earnings Calls Check upcoming earnings announcements updated hourly across public exchanges | |
| Bond Analysis Evaluate and analyze corporate bonds as a potential investment for your portfolios. | |
| Portfolio Dashboard Portfolio dashboard that provides centralized access to all your investments | |
| Transaction History View history of all your transactions and understand their impact on performance |