Correlation Between ETC On and Dow Jones
Can any of the company-specific risk be diversified away by investing in both ETC On 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 ETC On and Dow Jones into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between ETC on CMCI and Dow Jones Industrial, you can compare the effects of market volatilities on ETC On 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 ETC On with a short position of Dow Jones. Check out your portfolio center. Please also check ongoing floating volatility patterns of ETC On and Dow Jones.
Diversification Opportunities for ETC On and Dow Jones
Pay attention - limited upside
The 3 months correlation between ETC and Dow is -0.74. Overlapping area represents the amount of risk that can be diversified away by holding ETC on CMCI 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 ETC On 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 ETC on CMCI 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 ETC On i.e., ETC On and Dow Jones go up and down completely randomly.
Pair Corralation between ETC On and Dow Jones
Assuming the 90 days trading horizon ETC on CMCI is expected to under-perform the Dow Jones. In addition to that, ETC On is 2.32 times more volatile than Dow Jones Industrial. It trades about -0.06 of its total potential returns per unit of risk. Dow Jones Industrial is currently generating about 0.05 per unit of volatility. If you would invest 4,391,098 in Dow Jones Industrial on September 13, 2024 and sell it today you would earn a total of 23,758 from holding Dow Jones Industrial or generate 0.54% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 95.45% |
| Values | Daily Returns |
ETC on CMCI vs. Dow Jones Industrial
Performance |
| Timeline |
ETC On and Dow Jones Volatility Contrast
Predicted Return Density |
| Returns |
ETC on CMCI
Pair trading matchups for ETC On
Dow Jones Industrial
Pair trading matchups for Dow Jones
Pair Trading with ETC On and Dow Jones
The main advantage of trading using opposite ETC On and Dow Jones positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if ETC On 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.| ETC On vs. Scottish Mortgage Investment | ETC On vs. VinaCapital Vietnam Opportunity | ETC On vs. Edinburgh Worldwide Investment | ETC On vs. Baillie Gifford Growth |
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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 Portfolio Volatility module to check portfolio volatility and analyze historical return density to properly model market risk.
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