Correlation Between Dow Jones and Multi Manager
Can any of the company-specific risk be diversified away by investing in both Dow Jones and Multi Manager 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 Multi Manager 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 Multi Manager Directional Alternative, you can compare the effects of market volatilities on Dow Jones and Multi Manager 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 Multi Manager. Check out your portfolio center. Please also check ongoing floating volatility patterns of Dow Jones and Multi Manager.
Diversification Opportunities for Dow Jones and Multi Manager
0.93 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between Dow and Multi is 0.93. Overlapping area represents the amount of risk that can be diversified away by holding Dow Jones Industrial and Multi Manager Directional Alte in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Multi Manager Direct 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 Multi Manager. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Multi Manager Direct has no effect on the direction of Dow Jones i.e., Dow Jones and Multi Manager go up and down completely randomly.
Pair Corralation between Dow Jones and Multi Manager
Assuming the 90 days trading horizon Dow Jones Industrial is expected to generate 1.81 times more return on investment than Multi Manager. However, Dow Jones is 1.81 times more volatile than Multi Manager Directional Alternative. It trades about 0.22 of its potential returns per unit of risk. Multi Manager Directional Alternative is currently generating about 0.22 per unit of risk. If you would invest 3,914,223 in Dow Jones Industrial on April 17, 2025 and sell it today you would earn a total of 488,106 from holding Dow Jones Industrial or generate 12.47% 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. Multi Manager Directional Alte
Performance |
| Timeline |
Dow Jones and Multi Manager Volatility Contrast
Predicted Return Density |
| Returns |
Dow Jones Industrial
Pair trading matchups for Dow Jones
Multi Manager Directional Alternative
Pair trading matchups for Multi Manager
Pair Trading with Dow Jones and Multi Manager
The main advantage of trading using opposite Dow Jones and Multi Manager positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Dow Jones position performs unexpectedly, Multi Manager 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 Multi Manager will offset losses from the drop in Multi Manager's long position.| Dow Jones vs. Kite Realty Group | Dow Jones vs. Arhaus Inc | Dow Jones vs. Apogee Therapeutics, Common | Dow Jones vs. Logan Ridge Finance |
| Multi Manager vs. T Rowe Price | Multi Manager vs. T Rowe Price | Multi Manager vs. American Funds Retirement | Multi Manager vs. Voya Target Retirement |
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 Money Managers module to screen money managers from public funds and ETFs managed around the world.
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