Correlation Between BetaShares Managed and Dow Jones
Can any of the company-specific risk be diversified away by investing in both BetaShares Managed 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 BetaShares Managed and Dow Jones into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between BetaShares Managed Risk and Dow Jones Industrial, you can compare the effects of market volatilities on BetaShares Managed 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 BetaShares Managed with a short position of Dow Jones. Check out your portfolio center. Please also check ongoing floating volatility patterns of BetaShares Managed and Dow Jones.
Diversification Opportunities for BetaShares Managed and Dow Jones
0.87 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between BetaShares and Dow is 0.87. Overlapping area represents the amount of risk that can be diversified away by holding BetaShares Managed 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 BetaShares Managed 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 BetaShares Managed 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 BetaShares Managed i.e., BetaShares Managed and Dow Jones go up and down completely randomly.
Pair Corralation between BetaShares Managed and Dow Jones
Assuming the 90 days trading horizon BetaShares Managed is expected to generate 1.39 times less return on investment than Dow Jones. But when comparing it to its historical volatility, BetaShares Managed Risk is 1.2 times less risky than Dow Jones. It trades about 0.22 of its potential returns per unit of risk. Dow Jones Industrial is currently generating about 0.25 of returns per unit of risk over similar time horizon. If you would invest 4,238,757 in Dow Jones Industrial on August 29, 2024 and sell it today you would earn a total of 233,449 from holding Dow Jones Industrial or generate 5.51% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
BetaShares Managed Risk vs. Dow Jones Industrial
Performance |
| Timeline |
BetaShares Managed and Dow Jones Volatility Contrast
Predicted Return Density |
| Returns |
BetaShares Managed Risk
Pair trading matchups for BetaShares Managed
Dow Jones Industrial
Pair trading matchups for Dow Jones
Pair Trading with BetaShares Managed and Dow Jones
The main advantage of trading using opposite BetaShares Managed and Dow Jones positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if BetaShares Managed 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.| BetaShares Managed vs. Beta Shares SPASX | BetaShares Managed vs. Vanguard Total Market | BetaShares Managed vs. iShares SP 500 | BetaShares Managed vs. SPDR SP 500 |
| Dow Jones vs. Kaltura | Dow Jones vs. Artisan Partners Asset | Dow Jones vs. US Global Investors | Dow Jones vs. Analog Devices |
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 Headlines Timeline module to stay connected to all market stories and filter out noise. Drill down to analyze hype elasticity.
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