Correlation Between Dow Jones and Virtus International
Can any of the company-specific risk be diversified away by investing in both Dow Jones and Virtus International 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 Virtus International 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 Virtus International Small Cap, you can compare the effects of market volatilities on Dow Jones and Virtus International 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 Virtus International. Check out your portfolio center. Please also check ongoing floating volatility patterns of Dow Jones and Virtus International.
Diversification Opportunities for Dow Jones and Virtus International
-0.52 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Dow and Virtus is -0.52. Overlapping area represents the amount of risk that can be diversified away by holding Dow Jones Industrial and Virtus International Small Cap in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Virtus International 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 Virtus International. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Virtus International has no effect on the direction of Dow Jones i.e., Dow Jones and Virtus International go up and down completely randomly.
Pair Corralation between Dow Jones and Virtus International
Assuming the 90 days trading horizon Dow Jones Industrial is expected to generate 1.04 times more return on investment than Virtus International. However, Dow Jones is 1.04 times more volatile than Virtus International Small Cap. It trades about 0.24 of its potential returns per unit of risk. Virtus International Small Cap is currently generating about 0.0 per unit of risk. If you would invest 4,034,541 in Dow Jones Industrial on September 6, 2024 and sell it today you would earn a total of 466,863 from holding Dow Jones Industrial or generate 11.57% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Against |
Strength | Very Weak |
Accuracy | 100.0% |
Values | Daily Returns |
Dow Jones Industrial vs. Virtus International Small Cap
Performance |
Timeline |
Dow Jones and Virtus International Volatility Contrast
Predicted Return Density |
Returns |
Dow Jones Industrial
Pair trading matchups for Dow Jones
Virtus International Small Cap
Pair trading matchups for Virtus International
Pair Trading with Dow Jones and Virtus International
The main advantage of trading using opposite Dow Jones and Virtus International positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Dow Jones position performs unexpectedly, Virtus International 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 Virtus International will offset losses from the drop in Virtus International's long position.Dow Jones vs. NI Holdings | Dow Jones vs. GMS Inc | Dow Jones vs. QBE Insurance Group | Dow Jones vs. Direct Line Insurance |
Virtus International vs. Virtus Kar Small Cap | Virtus International vs. Virtus Kar Small Cap | Virtus International vs. Virtus Kar Mid Cap | Virtus International vs. Virtus Kar Mid Cap |
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 Correlation Analysis module to reduce portfolio risk simply by holding instruments which are not perfectly correlated.
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