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Dow Jones Industrial Average Return Rate vs. Real Estate Appreciation Rate
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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 1 Yr Real Estate Appreciation Rate
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1% Fall in 1 Yr Real Estate Appreciation Rate
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(from 5% to 6% for example) has typically been accompanied by a 0.46% Dow Jones
Industrial Average Return Rate increase during that year and a 1.37% Dow Jones
Industrial Average Return Rate decline the following year.
It also indicates that a 1% Real Estate Appreciation Rate decline over a 12 month
period, (from 5% to 4% for example) has typically been accompanied by a 0.98% Dow
Jones Industrial Average Return Rate decline during that year and a 2.42% Dow
Jones Industrial Average Return Rate increase the following year.
The center column shows the change in the Dow Jones Industrial Average Return
Rate over 12 months, depending on whether the period experienced a rising or falling
Real Estate Appreciation Rate. The right column shows the change in the Dow Jones
Industrial Average Return Rate during the year following an increase or decrease in
the Real Estate Appreciation Rate.
The data history in the middle column shows a significant 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 Real Estate
Appreciation Rate to predict the future direction of the Dow Jones Industrial
Average Return Rate is strong (right column). However, the direction of the
rates are inversely related to each other. A change in the Real Estate
Appreciation Rate suggests that the Dow Jones Industrial Average Return
Rate will move in the opposite direction of the Real Estate Appreciation 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 Real Estate Appreciation Rate and the
Dow Jones Industrial Average Return Rate. Suppose you are making a business or
investment decision. Suppose again that the decision hinges on whether the Real
Estate Appreciation Rate and the DJIA Return Rate tend to move in the same or
opposite directions. The data, Dow Jones Industrial Chart, and analysis above will
enlighten you. You'll discover whether they move with, inversely to, or independently
of each other.
Suppose that the Real Estate Appreciation Rate has risen sharply and that you need
to know what direction the Dow Jones Industrial Average Return Rate is headed in the
near future. Does the recent increase in the Real Estate Appreciation Rate provide a
clue about the future direction of the DJIA Return Rate? The data history, Dow Jones
Industrial Chart, and analysis above will show you how the Dow Jones Industrial
Average Return Rate has performed after increases in the Real Estate Appreciation
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 Real Estate Appreciation Rate:
1) Change in the Dow Jones Industrial Average Return Rate DURING periods with a
rising Real Estate Appreciation Rate:
The abbreviated formula is: (Dow Jones Industrial Average Return Rate Change /
Real Estate Appreciation Rate Rise) x 1% = Published Rate.
The complete formula is: [(Average change in the Dow Jones Industrial Average
Return Rate over all rolling 12 month periods with a rising Real Estate Appreciation
Rate) / (Average Rise in the Real Estate Appreciation Rate over the same 12 month
periods)] x 1% = Published Rate.
2) Change in the Dow Jones Industrial Average Return Rate AFTER a rising Real
Estate Appreciation Rate:
The abbreviated formula is: (Subsequent Dow Jones Industrial Average Return Rate
Change / Real Estate Appreciation Rate Rise) x 1% = Published Rate.
The complete formula is: [(Average change in the Dow Jones Industrial Average
Return Rate during the 12 months following any rolling 12 month base period with a
rising Real Estate Appreciation Rate) / (Average Rise in the Real Estate Appreciation
Rate over the 12 month base periods)] x 1% = Published Rate.
Formula for periods with a declining Real Estate Appreciation Rate:
1) Change in the Dow Jones Industrial Average Return Rate DURING periods with a
declining Real Estate Appreciation Rate:
The abbreviated formula is: (Dow Jones Industrial Average Return Rate Change /
Real Estate Appreciation Rate Decline) x -1% = Published Rate.
The complete formula is: [(Average change in the Dow Jones Industrial Average
Return Rate over all rolling 12 month periods with a declining Real Estate
Appreciation Rate) / (Average decline in the Real Estate Appreciation Rate over the
same 12 month periods)] x -1% = Published Rate.
2) Change in the Dow Jones Industrial Average Return Rate AFTER a decreasing
Real Estate Appreciation Rate:
The abbreviated formula is: (Subsequent Dow Jones Industrial Average Return Rate
Change / Real Estate Appreciation Rate Decrease) x -1% = Published Rate.
The complete formula is: [(Average change in the Dow Jones Industrial Average
Return Rate during the 12 months following any rolling 12 month base period with a
declining Real Estate Appreciation Rate) / (Average decline in the Real Estate
Appreciation 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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