Correlation Between Gateway Fund and Dow Jones

Specify exactly 2 symbols:
Can any of the company-specific risk be diversified away by investing in both Gateway Fund 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 Gateway Fund and Dow Jones into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Gateway Fund Class and Dow Jones Industrial, you can compare the effects of market volatilities on Gateway Fund 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 Gateway Fund with a short position of Dow Jones. Check out your portfolio center. Please also check ongoing floating volatility patterns of Gateway Fund and Dow Jones.

Diversification Opportunities for Gateway Fund and Dow Jones

0.9
  Correlation Coefficient

Almost no diversification

The 3 months correlation between Gateway and Dow is 0.9. Overlapping area represents the amount of risk that can be diversified away by holding Gateway Fund Class 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 Gateway Fund 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 Gateway Fund Class 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 Gateway Fund i.e., Gateway Fund and Dow Jones go up and down completely randomly.
    Optimize

Pair Corralation between Gateway Fund and Dow Jones

Assuming the 90 days horizon Gateway Fund Class is expected to generate 0.59 times more return on investment than Dow Jones. However, Gateway Fund Class is 1.71 times less risky than Dow Jones. It trades about 0.12 of its potential returns per unit of risk. Dow Jones Industrial is currently generating about 0.05 per unit of risk. If you would invest  4,471  in Gateway Fund Class on September 25, 2024 and sell it today you would earn a total of  158.00  from holding Gateway Fund Class or generate 3.53% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthVery Strong
Accuracy100.0%
ValuesDaily Returns

Gateway Fund Class  vs.  Dow Jones Industrial

 Performance 
       Timeline  

Gateway Fund and Dow Jones Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Gateway Fund and Dow Jones

The main advantage of trading using opposite Gateway Fund and Dow Jones positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Gateway Fund 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.
The idea behind Gateway Fund Class and Dow Jones Industrial pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.
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 ETF Categories module to list of ETF categories grouped based on various criteria, such as the investment strategy or type of investments.

Other Complementary Tools

Commodity Directory
Find actively traded commodities issued by global exchanges
Economic Indicators
Top statistical indicators that provide insights into how an economy is performing
Companies Directory
Evaluate performance of over 100,000 Stocks, Funds, and ETFs against different fundamentals
Headlines Timeline
Stay connected to all market stories and filter out noise. Drill down to analyze hype elasticity
Technical Analysis
Check basic technical indicators and analysis based on most latest market data