Correlation Between Dow Jones and Siit Large
Can any of the company-specific risk be diversified away by investing in both Dow Jones and Siit Large 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 Dow Jones and Siit Large into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Dow Jones Industrial and Siit Large Cap, you can compare the effects of market volatilities on Dow Jones and Siit Large 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 Dow Jones with a short position of Siit Large. Check out your portfolio center. Please also check ongoing floating volatility patterns of Dow Jones and Siit Large.
Diversification Opportunities for Dow Jones and Siit Large
0.98 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between Dow and Siit is 0.98. Overlapping area represents the amount of risk that can be diversified away by holding Dow Jones Industrial and Siit Large Cap in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Siit Large Cap and Dow Jones 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 Dow Jones Industrial are associated (or correlated) with Siit Large. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Siit Large Cap has no effect on the direction of Dow Jones i.e., Dow Jones and Siit Large go up and down completely randomly.
Pair Corralation between Dow Jones and Siit Large
Assuming the 90 days trading horizon Dow Jones is expected to generate 1.32 times less return on investment than Siit Large. In addition to that, Dow Jones is 1.08 times more volatile than Siit Large Cap. It trades about 0.19 of its total potential returns per unit of risk. Siit Large Cap is currently generating about 0.28 per unit of volatility. If you would invest 20,589 in Siit Large Cap on September 8, 2024 and sell it today you would earn a total of 2,599 from holding Siit Large Cap or generate 12.62% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Together |
Strength | Very Strong |
Accuracy | 100.0% |
Values | Daily Returns |
Dow Jones Industrial vs. Siit Large Cap
Performance |
Timeline |
Dow Jones and Siit Large Volatility Contrast
Predicted Return Density |
Returns |
Dow Jones Industrial
Pair trading matchups for Dow Jones
Siit Large Cap
Pair trading matchups for Siit Large
Pair Trading with Dow Jones and Siit Large
The main advantage of trading using opposite Dow Jones and Siit Large positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Dow Jones position performs unexpectedly, Siit Large 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 Siit Large will offset losses from the drop in Siit Large's long position.Dow Jones vs. JBG SMITH Properties | Dow Jones vs. Weyco Group | Dow Jones vs. Western Sierra Mining | Dow Jones vs. Summit Materials |
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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 Bonds Directory module to find actively traded corporate debentures issued by US companies.
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