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Dow Jones Performance (DJIA)
Dow Jones Average Return Rate / 3 Month Treasury Rate
Dow Jones Average Return Rate vs. 3 Month Treasury Rate
 
DJIA Return Rate
Simultaneous Change
DJIA Return Rate
Subsequent Change
1% Rise in 3 Month Treasury Rate over 1 Year
-4.79%
+1.64%
1% Decline in 3 Month Treasury Rate in 1 Year
+3.86%
-2.17%
What does the table mean?
It indicates that a 1% 3 Month Treasury Rate increase over a 12 month period, (from
5% to 6% for example) has typically been accompanied by a 4.79% Dow Jones
Industrial Average Return Rate decline during that year and a 1.64% Dow Jones
Industrial Average Return Rate increase the following year.

It also indicates that a 1% 3 Month Treasury Rate decline over a 12 month period,
(from 5% to 4% for example) has typically been accompanied by a 3.86% Dow Jones
Industrial Average Return Rate increase during that year and a 2.17% Dow Jones
Industrial Average Return Rate decline 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
3 Month Treasury 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 3 Month Treasury Rate.

The data history in the middle column shows a strong tendency for the two
rates to move inversely to each other during the same time period.

The evidence for using the previous 12 month change in the 3 Month
Treasury Rate to predict the future direction of the Dow Jones Industrial
Average Return Rate is strong (right column).

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 a drag on the performance of the Dow Jones
Industrial Average. 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 3 Month Treasury 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 3 Month
Treasury Rate and the Dow Jones Industrial Average 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 3 Month Treasury 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 3 Month Treasury Rate provide a clue
about the performance of the Dow Jones Industrial Average Return Rate? The data
history, graph, and analysis above will show you how the Dow Jones Industrial
Average Return Rate has performed after increases in the 3 Month Treasury 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 future performance 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
performance 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 3 Month Treasury Rate:
1) Change in the Dow Jones Industrial Average Return Rate DURING periods with a
rising 3 Month Treasury Rate:
The abbreviated formula is: (Dow Jones Industrial Average Return Rate Change / 3
Month Treasury 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 3 Month Treasury Rate) /
(Average Rise in the 3 Month Treasury Rate over the same 12 month periods)] x 1%
= Published Rate.

2) Change in the Dow Jones Industrial Average Return Rate AFTER a rising 3 Month
Treasury Rate:
The abbreviated formula is: (Subsequent Dow Jones Industrial Average Return Rate
Change / 3 Month Treasury 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 3 Month Treasury Rate) / (Average Rise in the 3 Month Treasury Rate over the
12 month base periods)] x 1% = Published Rate.


Formula for periods with a declining 3 Month Treasury Rate:
1) Change in the Dow Jones Industrial Average Return Rate DURING periods with a
declining 3 Month Treasury Rate:
The abbreviated formula is: (Dow Jones Industrial Average Return Rate Change / 3
Month Treasury 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 3 Month Treasury Rate)
/ (Average decline in the 3 Month Treasury Rate over the same 12 month periods)] x
-1% = Published Rate.

2) Change in the Dow Jones Industrial Average Return Rate AFTER a decreasing 3
Month Treasury Rate:
The abbreviated formula is: (Subsequent Dow Jones Industrial Average Return Rate
Change / 3 Month Treasury 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 3 Month Treasury Rate) / (Average decline in the 3 Month Treasury 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.
1/50          1/1960            1/1970            1/1980           1/1990             1/2000            1/2010            1/20
Dow Jones Performance is shown by the 12 month Dow Jones Average Return Rate, in gray. The rate
is based on the DJIA monthly close, excluding dividends. DJIA refers to the Dow Jones Industrial
Average. The 3 Month Treasury Rate is shown in green (average daily rate per month). Other
two-data-series graphs are available. See links at the bottom of each page.
-40%
40%
30%
20%
10%
0%
-10%
-20%
-30%
7%
5%
4%
3%
2%
1%
0%
6%
3 Month Treasury Rate
The Dow Jones Industrial Average, is shown above in gray and is measured using the left axis.
The 3 Month Treasury Rate is shown in black and is measured using the right axis.
Dow Jones Industrial Average
14000
10000
8000
6000
4000
2000
0
12000
1/2000        1/2002               1/2004              1/2006               1/2008               1/2010          1/2012
Multi-Index Chart
TwinCharts.com
More Multi-Index Charts
To see the Dow Jones Industrial Average on a chart with many other indexes like the
Gross National Product, Oil Prices or Unemployment Rates, click
Dow Jones Indicators.
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