Dow Jones Mid-cap Index Fundamentals
DJUSM Index | 1,690 3.51 0.21% |
DJUSM.INDX fundamentals not found at this time
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
0.61 | MSFT | Microsoft Earnings Call Tomorrow | PairCorr |
0.8 | NVDA | NVIDIA Financial Report 22nd of May 2024 | PairCorr |
0.62 | AMZN | Amazon Inc Earnings Call This Week | PairCorr |
Moving against Dow Index
0.7 | AAPL | Apple Inc Report 2nd of May 2024 | 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 Commodity Channel module to use Commodity Channel Index to analyze current equity momentum.