Correlation Between Dow Jones and IShares Equity
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By analyzing existing cross correlation between Dow Jones Industrial and iShares Equity Enhanced, you can compare the effects of market volatilities on Dow Jones and IShares Equity 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 IShares Equity. Check out your portfolio center. Please also check ongoing floating volatility patterns of Dow Jones and IShares Equity.
Diversification Opportunities for Dow Jones and IShares Equity
0.83 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Dow and IShares is 0.83. Overlapping area represents the amount of risk that can be diversified away by holding Dow Jones Industrial and iShares Equity Enhanced in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on iShares Equity Enhanced 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 IShares Equity. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of iShares Equity Enhanced has no effect on the direction of Dow Jones i.e., Dow Jones and IShares Equity go up and down completely randomly.
Pair Corralation between Dow Jones and IShares Equity
Assuming the 90 days trading horizon Dow Jones is expected to generate 2.14 times less return on investment than IShares Equity. But when comparing it to its historical volatility, Dow Jones Industrial is 1.31 times less risky than IShares Equity. It trades about 0.08 of its potential returns per unit of risk. iShares Equity Enhanced is currently generating about 0.12 of returns per unit of risk over similar time horizon. If you would invest 471.00 in iShares Equity Enhanced on September 23, 2024 and sell it today you would earn a total of 58.00 from holding iShares Equity Enhanced or generate 12.31% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Together |
Strength | Strong |
Accuracy | 20.93% |
Values | Daily Returns |
Dow Jones Industrial vs. iShares Equity Enhanced
Performance |
Timeline |
Dow Jones and IShares Equity Volatility Contrast
Predicted Return Density |
Returns |
Dow Jones Industrial
Pair trading matchups for Dow Jones
iShares Equity Enhanced
Pair trading matchups for IShares Equity
Pair Trading with Dow Jones and IShares Equity
The main advantage of trading using opposite Dow Jones and IShares Equity positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Dow Jones position performs unexpectedly, IShares Equity 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 IShares Equity will offset losses from the drop in IShares Equity's long position.Dow Jones vs. Teleflex Incorporated | Dow Jones vs. Sonida Senior Living | Dow Jones vs. Avadel Pharmaceuticals PLC | Dow Jones vs. Cardinal Health |
IShares Equity vs. Groupama Entreprises N | IShares Equity vs. Renaissance Europe C | IShares Equity vs. Superior Plus Corp | IShares Equity vs. Intel |
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 Comparator module to compare the composition, asset allocations and performance of any two portfolios in your account.
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