Dow Jones Index Forecast - Polynomial Regression
| DJUSM Index | 1,690 3.51 0.21% |
Most investors in Dow Jones cannot accurately predict what will happen the next trading day because, historically, index markets tend to be unpredictable and even illogical. Modeling turbulent structures requires applying different statistical methods, techniques, and algorithms to find hidden data structures or patterns within the Dow Jones' time series price data and predict how it will affect future prices. One of these methodologies is forecasting, which interprets Dow Jones' price structures and extracts relationships that further increase the generated results' accuracy.
Dow Jones polinomial regression implements a single variable polynomial regression model using the daily prices as the independent variable. The coefficients of the regression for Dow Jones Mid-Cap as well as the accuracy indicators are determined from the period prices. Dow Jones Polynomial Regression Price Forecast For the 25th of April
Given 90 days horizon, the Polynomial Regression forecasted value of Dow Jones Mid-Cap on the next trading day is expected to be 1,643 with a mean absolute deviation of 11.07, mean absolute percentage error of 203.11, and the sum of the absolute errors of 675.30.Please note that although there have been many attempts to predict Dow Index prices using its time series forecasting, we generally do not recommend using it to place bets in the real market. The most commonly used models for forecasting predictions are the autoregressive models, which specify that Dow Jones' next future price depends linearly on its previous prices and some stochastic term (i.e., imperfectly predictable multiplier).
Dow Jones Index Forecast Pattern
Dow Jones Forecasted Value
In the context of forecasting Dow Jones' Index value on the next trading day, we examine the predictive performance of the model to find good statistically significant boundaries of downside and upside scenarios. Dow Jones' downside and upside margins for the forecasting period are 1,642 and 1,644, respectively. We have considered Dow Jones' daily market price to evaluate the above model's predictive performance. Remember, however, there is no scientific proof or empirical evidence that traditional linear or nonlinear forecasting models outperform artificial intelligence and frequency domain models to provide accurate forecasts consistently.
Model Predictive Factors
The below table displays some essential indicators generated by the model showing the Polynomial Regression forecasting method's relative quality and the estimations of the prediction error of Dow Jones index data series using in forecasting. Note that when a statistical model is used to represent Dow Jones index, the representation will rarely be exact; so some information will be lost using the model to explain the process. AIC estimates the relative amount of information lost by a given model: the less information a model loses, the higher its quality.| AIC | Akaike Information Criteria | 123.4243 |
| Bias | Arithmetic mean of the errors | None |
| MAD | Mean absolute deviation | 11.0705 |
| MAPE | Mean absolute percentage error | 0.0066 |
| SAE | Sum of the absolute errors | 675.3019 |
Predictive Modules for Dow Jones
There are currently many different techniques concerning forecasting the market as a whole, as well as predicting future values of individual securities such as Dow Jones Mid-Cap. Regardless of method or technology, however, to accurately forecast the index market is more a matter of luck rather than a particular technique. Nevertheless, trying to predict the index market accurately is still an essential part of the overall investment decision process. Using different forecasting techniques and comparing the results might improve your chances of accuracy even though unexpected events may often change the market sentiment and impact your forecasting results.Sophisticated investors, who have witnessed many market ups and downs, anticipate that the market will even out over time. This tendency of Dow Jones' price to converge to an average value over time is called mean reversion. However, historically, high market prices usually discourage investors that believe in mean reversion to invest, while low prices are viewed as an opportunity to buy.
Please note, it is not enough to conduct a financial or market analysis of a single entity such as Dow Jones. Your research has to be compared to or analyzed against Dow Jones' peers to derive any actionable benefits. When done correctly, Dow Jones' competitive analysis will give you plenty of quantitative and qualitative data to validate your investment decisions or develop an entirely new strategy toward taking a position in Dow Jones Mid-Cap.
Other Forecasting Options for Dow Jones
For every potential investor in Dow, whether a beginner or expert, Dow Jones' price movement is the inherent factor that sparks whether it is viable to invest in it or hold it better. Dow Index price charts are filled with many 'noises.' These noises can hugely alter the decision one can make regarding investing in Dow. Basic forecasting techniques help filter out the noise by identifying Dow Jones' price trends.Dow Jones Related Equities
One of the popular trading techniques among algorithmic traders is to use market-neutral strategies where every trade hedges away some risk. Because there are two separate transactions required, even if one position performs unexpectedly, the other equity can make up some of the losses. Below are some of the equities that can be combined with Dow Jones index to make a market-neutral strategy. Peer analysis of Dow Jones could also be used in its relative valuation, which is a method of valuing Dow Jones by comparing valuation metrics with similar companies.
| Risk & Return | Correlation |
Dow Jones Mid-Cap Technical and Predictive Analytics
The index market is financially volatile. Despite the volatility, there exist limitless possibilities of gaining profits and building passive income portfolios. With the complexity of Dow Jones' price movements, a comprehensive understanding of forecasting methods that an investor can rely on to make the right move is invaluable. These methods predict trends that assist an investor in predicting the movement of Dow Jones' current price.| Cycle Indicators | ||
| Math Operators | ||
| Math Transform | ||
| Momentum Indicators | ||
| Overlap Studies | ||
| Pattern Recognition | ||
| Price Transform | ||
| Statistic Functions | ||
| Volatility Indicators | ||
| Volume Indicators |
Dow Jones Market Strength Events
Market strength indicators help investors to evaluate how Dow Jones index reacts to ongoing and evolving market conditions. The investors can use it to make informed decisions about market timing, and determine when trading Dow Jones shares will generate the highest return on investment. By undertsting and applying Dow Jones index market strength indicators, traders can identify Dow Jones Mid-Cap entry and exit signals to maximize returns.
| Accumulation Distribution | 0.0069 | |||
| Daily Balance Of Power | (0.30) | |||
| Rate Of Daily Change | 1.0 | |||
| Day Median Price | 1694.33 | |||
| Day Typical Price | 1692.89 | |||
| Market Facilitation Index | 11.71 | |||
| Price Action Indicator | (6.07) | |||
| Period Momentum Indicator | (3.51) | |||
| Relative Strength Index | 53.53 |
Dow Jones Risk Indicators
The analysis of Dow Jones' basic risk indicators is one of the essential steps in accurately forecasting its future price. The process involves identifying the amount of risk involved in Dow Jones' investment and either accepting that risk or mitigating it. Along with some essential techniques for forecasting dow index prices, we also provide a set of basic risk indicators that can assist in the individual investment decision or help in hedging the risk of your existing portfolios.
| Mean Deviation | 0.5616 | |||
| Semi Deviation | 0.7415 | |||
| Standard Deviation | 0.7295 | |||
| Variance | 0.5321 | |||
| Downside Variance | 0.7618 | |||
| Semi Variance | 0.5499 | |||
| Expected Short fall | (0.52) |
Please note, the risk measures we provide can be used independently or collectively to perform a risk assessment. When comparing two potential investments, we recommend comparing similar equities with homogenous growth potential and valuation from related markets to determine which investment holds the most risk.
Some investors attempt to determine whether the market's mood is bullish or bearish by monitoring changes in market sentiment. Unlike more traditional methods such as technical analysis, investor sentiment usually refers to the aggregate attitude towards Dow Jones in the overall investment community. So, suppose investors can accurately measure the market's sentiment. In that case, they can use it for their benefit. For example, some tools to gauge market sentiment could be utilized using contrarian indexes, Dow Jones' short interest history, or implied volatility extrapolated from Dow Jones options trading.
Pair Trading with Dow Jones
One of the main advantages of trading using pair correlations is that every trade hedges away some risk. Because there are two separate transactions required, even if Dow Jones position performs unexpectedly, the other equity 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 appreciate offsetting losses from the drop in the long position's value.Moving together with Dow Index
| 0.71 | MSFT | Microsoft Earnings Call Tomorrow | PairCorr |
| 0.9 | NVDA | NVIDIA Financial Report 22nd of May 2024 | PairCorr |
| 0.76 | AMZN | Amazon Inc Earnings Call This Week | PairCorr |
Moving against Dow Index
| 0.8 | AAPL | Apple Inc Earnings Call Next Week | PairCorr |
The ability to find closely correlated positions to Dow Jones could be a great tool in your tax-loss harvesting strategies, allowing investors a quick way to find a similar-enough asset to replace Dow Jones when you sell it. If you don't do this, your portfolio allocation will be skewed against your target asset allocation. So, investors can't just sell and buy back Dow Jones - that would be a violation of the tax code under the "wash sale" rule, and this is why you need to find a similar enough asset and use the proceeds from selling Dow Jones Mid-Cap to buy it.
The correlation of Dow Jones is a statistical measure of how it moves in relation to other instruments. This measure is expressed in what is known as the correlation coefficient, which ranges between -1 and +1. A perfect positive correlation (i.e., a correlation coefficient of +1) implies that as Dow Jones moves, either up or down, the other security will move in the same direction. Alternatively, perfect negative correlation means that if Dow Jones Mid-Cap moves in either direction, the perfectly negatively correlated security will move in the opposite direction. If the correlation is 0, the equities are not correlated; they are entirely random. A correlation greater than 0.8 is generally described as strong, whereas a correlation less than 0.5 is generally considered weak.
Correlation analysis and pair trading evaluation for Dow Jones can also be used as hedging techniques within a particular sector or industry or even over random equities to generate a better risk-adjusted return on your portfolios.Check out Investing Opportunities to better understand how to build diversified portfolios. Also, note that the market value of any index could be tightly coupled with the direction of predictive economic indicators such as signals in population. You can also try the Equity Analysis module to research over 250,000 global equities including funds, stocks and ETFs to find investment opportunities.