Correlation Analysis Between SP 500 and DOW

Analyzing existing cross correlation between S&P 500 and DOW. You can compare the effects of market volatilities on SP 500 and DOW 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 SP 500 with a short position of DOW. See also your portfolio center. Please also check ongoing floating volatility patterns of SP 500 and DOW.
Horizon     30 Days    Login   to change
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Comparative Performance

 Predicted Return Density 
    
  Returns 

S&P 500  vs.  DOW

 Performance (%) 
    
  Timeline 

Pair Volatility

Assuming 30 trading days horizon, S&P 500 is expected to generate 0.89 times more return on investment than DOW. However, S&P 500 is 1.12 times less risky than DOW. It trades about 0.39 of its potential returns per unit of risk. DOW is currently generating about 0.31 per unit of risk. If you would invest  300,672  in S&P 500 on December 19, 2019 and sell it today you would earn a total of  32,290  from holding S&P 500 or generate 10.74% return on investment over 30 days.

Pair Corralation between SP 500 and DOW

0.99
Time Period3 Months [change]
DirectionPositive 
StrengthVery Strong
Accuracy100.0%
ValuesDaily Returns

Diversification Opportunities for SP 500 and DOW

S&P 500 diversification synergy

No risk reduction

Overlapping area represents the amount of risk that can be diversified away by holding S&P 500 and DOW in the same portfolio assuming nothing else is changed. The correlation between historical prices or returns on DOW and SP 500 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 S&P 500 are associated (or correlated) with DOW. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of DOW has no effect on the direction of SP 500 i.e. SP 500 and DOW go up and down completely randomly.
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