Correlation Between Smart REIT and Dow Jones
Can any of the company-specific risk be diversified away by investing in both Smart REIT 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 Smart REIT and Dow Jones into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Smart REIT and Dow Jones Industrial, you can compare the effects of market volatilities on Smart REIT 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 Smart REIT with a short position of Dow Jones. Check out your portfolio center. Please also check ongoing floating volatility patterns of Smart REIT and Dow Jones.
Diversification Opportunities for Smart REIT and Dow Jones
0.35 | Correlation Coefficient |
Weak diversification
The 3 months correlation between Smart and Dow is 0.35. Overlapping area represents the amount of risk that can be diversified away by holding Smart REIT 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 Smart REIT 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 Smart REIT 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 Smart REIT i.e., Smart REIT and Dow Jones go up and down completely randomly.
Pair Corralation between Smart REIT and Dow Jones
Assuming the 90 days horizon Smart REIT is expected to generate 1.61 times more return on investment than Dow Jones. However, Smart REIT is 1.61 times more volatile than Dow Jones Industrial. It trades about -0.04 of its potential returns per unit of risk. Dow Jones Industrial is currently generating about -0.09 per unit of risk. If you would invest 1,843 in Smart REIT on December 4, 2024 and sell it today you would lose (67.00) from holding Smart REIT or give up 3.64% of portfolio value over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Together |
Strength | Very Weak |
Accuracy | 98.33% |
Values | Daily Returns |
Smart REIT vs. Dow Jones Industrial
Performance |
Timeline |
Smart REIT and Dow Jones Volatility Contrast
Predicted Return Density |
Returns |
Smart REIT
Pair trading matchups for Smart REIT
Dow Jones Industrial
Pair trading matchups for Dow Jones
Pair Trading with Smart REIT and Dow Jones
The main advantage of trading using opposite Smart REIT and Dow Jones positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Smart REIT 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.Smart REIT vs. Firm Capital Property | Smart REIT vs. Slate Grocery REIT | Smart REIT vs. Phillips Edison Co | Smart REIT vs. Choice Properties Real |
Dow Jones vs. Balchem | Dow Jones vs. Merit Medical Systems | Dow Jones vs. American Vanguard | Dow Jones vs. Regeneron Pharmaceuticals |
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 ETFs module to find actively traded Exchange Traded Funds (ETF) from around the world.
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