Correlation Between Multi Strategy and Dow Jones
Can any of the company-specific risk be diversified away by investing in both Multi Strategy 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 Multi Strategy and Dow Jones into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between The Multi Strategy Growth and Dow Jones Industrial, you can compare the effects of market volatilities on Multi Strategy 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 Multi Strategy with a short position of Dow Jones. Check out your portfolio center. Please also check ongoing floating volatility patterns of Multi Strategy and Dow Jones.
Diversification Opportunities for Multi Strategy and Dow Jones
0.91 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between Multi and Dow is 0.91. Overlapping area represents the amount of risk that can be diversified away by holding The Multi Strategy Growth 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 Multi Strategy 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 The Multi Strategy Growth 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 Multi Strategy i.e., Multi Strategy and Dow Jones go up and down completely randomly.
Pair Corralation between Multi Strategy and Dow Jones
Assuming the 90 days horizon The Multi Strategy Growth is not expected to generate positive returns. However, The Multi Strategy Growth is 1.55 times less risky than Dow Jones. It waists most of its returns potential to compensate for thr risk taken. Dow Jones is generating about 0.05 per unit of risk. If you would invest 4,191,475 in Dow Jones Industrial on September 25, 2024 and sell it today you would earn a total of 99,220 from holding Dow Jones Industrial or generate 2.37% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Together |
Strength | Very Strong |
Accuracy | 98.44% |
Values | Daily Returns |
The Multi Strategy Growth vs. Dow Jones Industrial
Performance |
Timeline |
Multi Strategy and Dow Jones Volatility Contrast
Predicted Return Density |
Returns |
The Multi Strategy Growth
Pair trading matchups for Multi Strategy
Dow Jones Industrial
Pair trading matchups for Dow Jones
Pair Trading with Multi Strategy and Dow Jones
The main advantage of trading using opposite Multi Strategy and Dow Jones positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Multi Strategy 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.Multi Strategy vs. Touchstone Large Cap | Multi Strategy vs. T Rowe Price | Multi Strategy vs. Qs Large Cap | Multi Strategy vs. Dodge Cox Stock |
Dow Jones vs. Aerofoam Metals | Dow Jones vs. Lion One Metals | Dow Jones vs. Blue Moon Metals | Dow Jones vs. Xunlei Ltd Adr |
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 Pattern Recognition module to use different Pattern Recognition models to time the market across multiple global exchanges.
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