Correlation Between SGI Enhanced and Dow Jones
Can any of the company-specific risk be diversified away by investing in both SGI Enhanced 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 SGI Enhanced and Dow Jones into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between SGI Enhanced Core and Dow Jones Industrial, you can compare the effects of market volatilities on SGI Enhanced 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 SGI Enhanced with a short position of Dow Jones. Check out your portfolio center. Please also check ongoing floating volatility patterns of SGI Enhanced and Dow Jones.
Diversification Opportunities for SGI Enhanced and Dow Jones
0.86 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between SGI and Dow is 0.86. Overlapping area represents the amount of risk that can be diversified away by holding SGI Enhanced Core 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 SGI Enhanced 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 SGI Enhanced Core 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 SGI Enhanced i.e., SGI Enhanced and Dow Jones go up and down completely randomly.
Pair Corralation between SGI Enhanced and Dow Jones
Given the investment horizon of 90 days SGI Enhanced is expected to generate 3.01 times less return on investment than Dow Jones. But when comparing it to its historical volatility, SGI Enhanced Core is 7.99 times less risky than Dow Jones. It trades about 0.34 of its potential returns per unit of risk. Dow Jones Industrial is currently generating about 0.13 of returns per unit of risk over similar time horizon. If you would invest 3,541,698 in Dow Jones Industrial on August 24, 2024 and sell it today you would earn a total of 845,337 from holding Dow Jones Industrial or generate 23.87% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 81.12% |
| Values | Daily Returns |
SGI Enhanced Core vs. Dow Jones Industrial
Performance |
| Timeline |
SGI Enhanced and Dow Jones Volatility Contrast
Predicted Return Density |
| Returns |
SGI Enhanced Core
Pair trading matchups for SGI Enhanced
Dow Jones Industrial
Pair trading matchups for Dow Jones
Pair Trading with SGI Enhanced and Dow Jones
The main advantage of trading using opposite SGI Enhanced and Dow Jones positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if SGI Enhanced 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.| SGI Enhanced vs. Franklin Templeton ETF | SGI Enhanced vs. Tidal Trust II | SGI Enhanced vs. Tidal Trust II | SGI Enhanced vs. iShares Dividend and |
| Dow Jones vs. Barrick Gold Corp | Dow Jones vs. Jutal Offshore Oil | Dow Jones vs. Eastern Co | Dow Jones vs. Weyco Group |
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 Fundamentals Comparison module to compare fundamentals across multiple equities to find investing opportunities.
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