Correlation Analysis Between DOW and Nasdaq

This module allows you to analyze existing cross correlation between DOW and Nasdaq. You can compare the effects of market volatilities on DOW and Nasdaq 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 with a short position of Nasdaq. See also your portfolio center. Please also check ongoing floating volatility patterns of DOW and Nasdaq.
Horizon     30 Days    Login   to change
Compare Efficiency

Comparative Performance

 Predicted Return Density 

DOW  vs.  Nasdaq

 Performance (%) 

Pair Volatility

Given the investment horizon of 30 days, DOW is expected to generate 0.73 times more return on investment than Nasdaq. However, DOW is 1.37 times less risky than Nasdaq. It trades about -0.13 of its potential returns per unit of risk. Nasdaq is currently generating about -0.12 per unit of risk. If you would invest  2,544,434  in DOW on November 18, 2018 and sell it today you would lose (176,870)  from holding DOW or give up 6.95% of portfolio value over 30 days.

Pair Corralation between DOW and Nasdaq

Time Period2 Months [change]
StrengthVery Strong
ValuesDaily Returns

Diversification Opportunities for DOW and Nasdaq

DOW diversification synergy

Almost no diversification

Overlapping area represents the amount of risk that can be diversified away by holding DOW and Nasdaq in the same portfolio assuming nothing else is changed. The correlation between historical prices or returns on Nasdaq and DOW 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 are associated (or correlated) with Nasdaq. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Nasdaq has no effect on the direction of DOW i.e. DOW and Nasdaq go up and down completely randomly.

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See also your portfolio center. Please also try Pair Correlation module to compare performance and examine historical correlation between any two equity instruments.