Correlation Between Dow Jones and Arbitrage Event
Can any of the company-specific risk be diversified away by investing in both Dow Jones and Arbitrage Event 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 Arbitrage Event 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 The Arbitrage Event Driven, you can compare the effects of market volatilities on Dow Jones and Arbitrage Event 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 Arbitrage Event. Check out your portfolio center. Please also check ongoing floating volatility patterns of Dow Jones and Arbitrage Event.
Diversification Opportunities for Dow Jones and Arbitrage Event
0.9 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between Dow and Arbitrage is 0.9. Overlapping area represents the amount of risk that can be diversified away by holding Dow Jones Industrial and The Arbitrage Event Driven in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Arbitrage Event 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 Arbitrage Event. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Arbitrage Event has no effect on the direction of Dow Jones i.e., Dow Jones and Arbitrage Event go up and down completely randomly.
Pair Corralation between Dow Jones and Arbitrage Event
Assuming the 90 days trading horizon Dow Jones Industrial is expected to generate 8.18 times more return on investment than Arbitrage Event. However, Dow Jones is 8.18 times more volatile than The Arbitrage Event Driven. It trades about 0.07 of its potential returns per unit of risk. The Arbitrage Event Driven is currently generating about 0.25 per unit of risk. If you would invest 4,483,756 in Dow Jones Industrial on May 28, 2025 and sell it today you would earn a total of 44,491 from holding Dow Jones Industrial or generate 0.99% 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. The Arbitrage Event Driven
Performance |
| Timeline |
Dow Jones and Arbitrage Event Volatility Contrast
Predicted Return Density |
| Returns |
Dow Jones Industrial
Pair trading matchups for Dow Jones
The Arbitrage Event Driven
Pair trading matchups for Arbitrage Event
Pair Trading with Dow Jones and Arbitrage Event
The main advantage of trading using opposite Dow Jones and Arbitrage Event positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Dow Jones position performs unexpectedly, Arbitrage Event 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 Arbitrage Event will offset losses from the drop in Arbitrage Event's long position.| Dow Jones vs. United Airlines Holdings | Dow Jones vs. American Airlines Group | Dow Jones vs. Assurant | Dow Jones vs. Delta Air Lines |
| Arbitrage Event vs. Qs Growth Fund | Arbitrage Event vs. Tfa Alphagen Growth | Arbitrage Event vs. Mairs Power Growth | Arbitrage Event vs. Morningstar Growth Etf |
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 Rebalancing module to analyze risk-adjusted returns against different time horizons to find asset-allocation targets.
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