Dow Jones:FTSE100 ratio - historic relationship?

[johnfm]

Just looking at the DJIA (at about 8500 at the moment) and the FTSE100 (at 4290 as I type)

What has the ratio of the two been, historically speaking?

I'm not sure if it is relevant at all, but I'm just interested to see the change in relative value between the two 'baskets' of equities.

[NoelWatson]

johnfm said:

Just looking at the DJIA (at about 8500 at the moment) and the FTSE100 (at 4290 as I type)

What has the ratio of the two been, historically speaking?

I'm not sure if it is relevant at all, but I'm just interested to see the change in relative value between the two 'baskets' of equities.

For the total return indices?

[johnfm]

Not sure of your question, Noel.

All I am thinking is that over time the FTSE will have had a different 'value' at close of every day, as will the DOw. THere will be a currency variation between the two currencies (as I guess the 'index' value is £ for the FTSE and $ for the DJIA.

So, I just wanted to see if there was any interesting relationship between the two over the years.

[NoelWatson]

johnfm said:

Not sure of your question, Noel.

All I am thinking is that over time the FTSE will have had a different 'value' at close of every day, as will the DOw. THere will be a currency variation between the two currencies (as I guess the 'index' value is £ for the FTSE and $ for the DJIA.

So, I just wanted to see if there was any interesting relationship between the two over the years.

You have a choice of either including dividends or not. You can also convert the DOW into pounds. Several ways of looking at the data - depends what you are looking for.

[bluevelvet]

Historic relationships, don't necceserily offer any guarantees going forward.....you have to consider the different constructions and weightings of the indices, which can change things over time...
I did quite a bit of work (well for me) on equities a few years ago and have in my notes; between 1991-2003 the correlation between Ftse & Dow was .996.

[johnfm]

Well, found some data, after correcting for £:$, found DJIA:FTSE peaked at around 1.3:1 in mid 2003/early 2004 and then dropped back to around 1:1.

Don't know what it means, but I was just interested in the ratio.

[bluevelvet]

With respect, what does it mean?....you have a currency adjusted sample over a short period of time. it sounds like data mining, you could more or less prove whatever you wanted to.
Run a hypothesis test on this, what do you prove that could be useful?