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DJIA 30 Return Rate vs. S&P 100 Return Rate: Analysis
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DJIA Return Rate
Simultaneous Change
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DJIA Return Rate
Subsequent Change
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1% Rise in S&P 100 Return Rate over 1 Year
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1% Decline in S&P 100 Return Rate over 1 Year
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It indicates that a 1% S&P 100 Return Rate increase over a 12 month period, (from
5% to 6% for example) has typically been accompanied by a 0.93% DJIA Return Rate
increase during that year and a 0.39% DJIA Return Rate decline the following year.
It also indicates that a 1% S&P 100 Return Rate decline over a 12 month period,
(from 5% to 4% for example) has typically been accompanied by a 0.93% DJIA Return
Rate decline during that year and a 0.43% DJIA Return Rate increase the following
year.
The center column shows the change in the DJIA Return Rate over 12 months,
depending on whether the period experienced a rising or falling S&P 100 Return
Rate. The right column shows the change in the DJIA Return Rate during the year
following an increase or decrease in the S&P 100 Return Rate.
The data history in the middle column shows a strong tendency for the two
rates to move in the same direction during the same time period.
The evidence for using the previous 12 month change in the S&P 100 Return
Rate to predict the future direction of the DJIA Return Rate is significant
(right column). However, the direction of the rates are inversely related to
each other. A change in the S&P 100 Return Rate suggests that the DJIA
Return Rate will move in the opposite direction of the S&P 100 Return Rate.
Annual rates are shown in the graph and calculations.
How Do I Use This Information?
There are many investment theories that are well publicized in the financial press.
Even though little or no historical data may be offered as evidence for such theories,
many investors use them subconsciously, if not intentionally.
Example Theories: Rising Inflation is bad for the stock market. A booming housing
market is good for the S&P 500 stock index. A falling fed funds rate means that long
term interest rates will fall.
There are many such theories. In this site, long term investment and economic data
is tested against decades to determine whether a relationship actually exists or not.
This historical correlation provides a vital aid in interpreting the often confusing
behavior of the financial markets. The perspective gained may be the difference
between staying the course or being blown and tossed by every investment theory
that is popular at the moment. What the majority assumes to be true, often is not. In
the final analysis, readers are admonished to follow the evidence, wherever it leads.
This page tests the relationship between the S&P 100 Return Rate and the DJIA
Return Rate. Suppose you are making a business or investment decision. Suppose
again that the decision hinges on whether the S&P 100 Return Rate and the DJIA
Return Rate tend to move in the same or opposite directions. The data, graphs, and
analysis above will enlighten you. You'll discover whether they move with, inversely to,
or independently of each other.
Suppose that the S&P 100 Return Rate has risen sharply and that you need to know
what direction the DJIA Return Rate is headed in the near future. Does the recent
increase in the S&P 100 Return Rate provide a clue about the future direction of the
DJIA Return Rate? The data history, graph, and analysis above will show you how the
DJIA Return Rate has performed after increases in the S&P 100 Return Rate. You'll
see if one indicator has been likely to signal a change in another. This is not intended
as a prediction, but merely as a clue to the future from the annals of history. No man
knows the future, unless he has the ability to control the future.
This site compares data series for interest rates, stock indexes, economic indicators,
currency exchange rates and real estate values. Suppose that you want to see how
stock indexes are influenced by interest rates or the value of the dollar. Click one of
the stock index links on the right side of any page. Links to our multi-series graphs
and correlation analysis may be found at the bottom-center of the stock index pages.
Formula for periods with a rising S&P 100 Return Rate:
1) Change in the DJIA 30 Return Rate DURING periods with a rising S&P 100 Return
Rate:
The abbreviated formula is: (DJIA 30 Return Rate Change / S&P 100 Return Rate
Rise) x 1% = Published Rate.
The complete formula is: [(Average change in the DJIA 30 Return Rate over all rolling
12 month periods with a rising S&P 100 Return Rate) / (Average Rise in the S&P 100
Return Rate over the same 12 month periods)] x 1% = Published Rate.
2) Change in the DJIA 30 Return Rate AFTER a rising S&P 100 Return Rate:
The abbreviated formula is: (Subsequent DJIA 30 Return Rate Change / S&P 100
Return Rate Rise) x 1% = Published Rate.
The complete formula is: [(Average change in the DJIA 30 Return Rate during the 12
months following any rolling 12 month base period with a rising S&P 100 Return Rate)
/ (Average Rise in the S&P 100 Return Rate over the 12 month base periods)] x 1% =
Published Rate.
Formula for periods with a declining S&P 100 Return Rate:
1) Change in the DJIA 30 Return Rate DURING periods with a declining S&P 100
Return Rate:
The abbreviated formula is: (DJIA 30 Return Rate Change / S&P 100 Return Rate
Decline) x -1% = Published Rate.
The complete formula is: [(Average change in the DJIA 30 Return Rate over all rolling
12 month periods with a declining S&P 100 Return Rate) / (Average decline in the
S&P 100 Return Rate over the same 12 month periods)] x -1% = Published Rate.
2) Change in the DJIA 30 Return Rate AFTER a decreasing S&P 100 Return Rate:
The abbreviated formula is: (Subsequent DJIA 30 Return Rate Change / S&P 100
Return Rate Decrease) x -1% = Published Rate.
The complete formula is: [(Average change in the DJIA 30 Return Rate during the 12
months following any rolling 12 month base period with a declining S&P 100 Return
Rate) / (Average decline in the S&P 100 Return Rate over the 12 month base
periods)] x -1% = Published Rate.
Rolling 12 Month Periods Defined:
Overlapping 12 month periods in a monthly data base.
For example:
In the 24 month period included in 2000 - 2001, there are 13 complete rolling 12
month periods. The first is January, 2000 - December, 2000. The second is February,
2000 - January, 2001. The third is March, 2000 - February, 2001 and so on. The last
complete rolling 12 month period in the 2000 - 2001 period is January, 2001 -
December, 2001.
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