DOW Index Volatility

DJI
 Index
  

 28,726  500.10  1.71%   

DOW secures Sharpe Ratio (or Efficiency) of -0.0977, which denotes the index had -0.0977% of return per unit of volatility over the last 3 months. Macroaxis approach towards predicting the risk of any index is to look at both systematic and unsystematic factors of the business, including all available market data and technical indicators. DOW exposes twenty-eight different technical indicators, which can help you to evaluate volatility that cannot be diversified away.
DOW Index volatility depicts how high the prices fluctuate around the mean (or its average) price. In other words, it is a statistical measure of the distribution of DOW daily returns, and it is calculated using variance and standard deviation. We also use DOW's beta, its sensitivity to the market, as well as its odds of financial distress to provide a more practical estimation of DOW volatility.

Using DOW Put Option to Manage Risk

Put options written on DOW grant holders of the option the right to sell a specified amount of DOW at a specified price within a specified time frame. The put buyer has a limited loss and, while not fully unlimited gains, as the price of DOW Index cannot fall below zero, the put buyer does gain as the price drops. So, one way investors can hedge DOW's position is by buying a put option against it. The put option used this way is usually referred to as insurance. If an undesired outcome occurs and loss on holding DOW will be realized, the loss incurred will be offset by the profits made with the option trade.

DOW's PUT expiring on 2022-10-07

   Profit   
Share
       DOW Price At Expiration  

Current DOW Insurance Chain

DeltaGammaOpen IntExpirationCurrent SpreadLast Price
Put
2022-10-07 PUT at $290.0-0.61490.043922022-10-072.65 - 7.455.0View
View All DOW Options

DOW Index Volatility Analysis

Volatility refers to the frequency at which DOW index price increases or decreases within a specified period. These fluctuations usually indicate the level of risk that's associated with DOW's price changes. Investors will then calculate the volatility of DOW's index to predict their future moves. A index that has erratic price changes quickly hits new highs, and lows are considered highly volatile. A index with relatively stable price changes has low volatility. A highly volatile index is riskier, but the risk cuts both ways. Investing in highly volatile security can either be highly successful, or you may experience significant failure. There are two main types of DOW's volatility:

Historical Volatility

This type of index volatility measures DOW's fluctuations based on previous trends. It's commonly used to predict DOW's future behavior based on its past. However, it cannot conclusively determine the future direction of the index.

Implied Volatility

This type of volatility provides a positive outlook on future price fluctuations for DOW's current market price. This means that the index will return to its initially predicted market price. This type of volatility can be derived from derivative instruments written on DOW's to be redeemed at a future date.
Transformation
The output start index for this execution was zero with a total number of output elements of sixty-one. The Median Price line plots median indexes of DOW price series.
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DOW Projected Return Density Against Market

   Predicted Return Density   
       Returns  
DOW's volatility is measured either by using standard deviation or beta. Standard deviation will reflect the average amount of how dow index's price will differ from the mean after some time.To get its calculation, you should first determine the mean price during the specified period then subtract that from each price point.

What Drives a DOW Price Volatility?

Several factors can influence a Index's stock volatility:

Industry

Specific events can influence volatility within a particular industry. For instance, a significant weather upheaval in a crucial oil-production site may cause oil prices to increase in the oil sector. The direct result will be the rise in the stock price of oil distribution companies. Similarly, any government regulation in a specific industry could negatively influence stock prices due to increased regulations on compliance that may impact the company's future earnings and growth.

Political and Economic environment

When governments make significant decisions regarding trade agreements, policies, and legislation regarding specific industries, they will influence stock prices. Everything from speeches to elections may influence investors, who can directly influence the stock prices in any particular industry. The prevailing economic situation also plays a significant role in stock prices. When the economy is doing well, investors will have a positive reaction and hence, better stock prices and vice versa.

The Company's Performance

Sometimes volatility will only affect an individual company. For example, a revolutionary product launch or strong earnings report may attract many investors to purchase the company. This positive attention will raise the company's stock price. In contrast, product recalls and data breaches may negatively influence a company's stock prices.

About DOW Volatility

Volatility is a rate at which the price of DOW or any other equity instrument increases or decreases for a given set of returns. It is measured by calculating the standard deviation of the annualized returns over a given period of time and shows the range to which the price of DOW may increase or decrease. In other words, similar to DOW's beta indicator, it measures the risk of DOW and helps estimate the fluctuations that may happen in a short period of time. So if prices of DOW fluctuate rapidly in a short time span, it is termed to have high volatility, and if it swings slowly in a more extended period, it is understood to have low volatility.
Please read more on our technical analysis page.

DOW Investment Opportunity

DOW has the same returns volatility as DOW considering given time horizon. 10  of all equities and portfolios are less risky than DOW. Compared to the overall equity markets, volatility of historical daily returns of DOW is lower than 10 () of all global equities and portfolios over the last 90 days. Use DOW to protect your portfolios against small market fluctuations. Benchmarks are essential to demonstrate the utility of optimization algorithms. The index experiences a somewhat bearish sentiment, but the market may correct it shortly. Check odds of DOW to be traded at 27863.74 in 90 days.

DOW Additional Risk Indicators

The analysis of DOW's secondary risk indicators is one of the essential steps in making a buy or sell decision. The process involves identifying the amount of risk involved in DOW's investment and either accepting that risk or mitigating it. Along with some common measures of DOW index's risk such as standard deviation, beta, or value at risk, we also provide a set of secondary indicators that can assist in the individual investment decision or help in hedging the risk of your existing portfolios.
Please note, the risk measures we provide can be used independently or collectively to perform a risk assessment. When comparing two potential indexs, we recommend comparing similar indexs with homogenous growth potential and valuation from related markets to determine which investment holds the most risk.

DOW Suggested Diversification Pairs

Pair trading is one of the very effective strategies used by professional day traders and hedge funds capitalizing on short-time and mid-term market inefficiencies. The approach is based on the fact that the ratio of prices of two correlating shares is long-term stable and oscillates around the average value. If the correlation ratio comes outside the common area, you can speculate with a high success rate that the ratio will return to the mean value and collect a profit.
The effect of pair diversification on risk is to reduce it, but we should note this doesn't apply to all risk types. When we trade pairs against DOW as a counterpart, there is always some inherent risk that will never be diversified away no matter what. This volatility limits the effect of tactical diversification using pair trading. DOW's systematic risk is the inherent uncertainty of the entire market, and therefore cannot be mitigated even by pair-trading it against the equity that is not highly correlated to it. On the other hand, DOW's unsystematic risk describes the types of risk that we can protect against, at least to some degree, by selecting a matching pair that is not perfectly correlated to DOW.
Check out Your Current Watchlist. You can also try Instant Ratings module to determine any equity ratings based on digital recommendations. Macroaxis instant equity ratings are based on combination of fundamental analysis and risk-adjusted market performance.

Other Tools for DOW Index

When running DOW price analysis, check to measure DOW's market volatility, profitability, liquidity, solvency, efficiency, growth potential, financial leverage, and other vital indicators. We have many different tools that can be utilized to determine how healthy DOW is operating at the current time. Most of DOW's value examination focuses on studying past and present price action to predict the probability of DOW's future price movements. You can analyze the entity against its peers and financial market as a whole to determine factors that move DOW's price. Additionally, you may evaluate how the addition of DOW to your portfolios can decrease your overall portfolio volatility.
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