Correlation Between A1KA34 and Dow Jones
Can any of the company-specific risk be diversified away by investing in both A1KA34 and Dow Jones at the same time? Although using a correlation coefficient on its own may not help to predict future stock returns, this module helps to understand the diversifiable risk of combining A1KA34 and Dow Jones into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between A1KA34 and Dow Jones Industrial, you can compare the effects of market volatilities on A1KA34 and Dow Jones and check how they will diversify away market risk if combined in the same portfolio for a given time horizon. You can also utilize pair trading strategies of matching a long position in A1KA34 with a short position of Dow Jones. Check out your portfolio center. Please also check ongoing floating volatility patterns of A1KA34 and Dow Jones.
Diversification Opportunities for A1KA34 and Dow Jones
Average diversification
The 3 months correlation between A1KA34 and Dow is 0.14. Overlapping area represents the amount of risk that can be diversified away by holding A1KA34 and Dow Jones Industrial in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Dow Jones Industrial and A1KA34 is a relative statistical measure of the degree to which these equity instruments tend to move together. The correlation coefficient measures the extent to which returns on A1KA34 are associated (or correlated) with Dow Jones. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Dow Jones Industrial has no effect on the direction of A1KA34 i.e., A1KA34 and Dow Jones go up and down completely randomly.
Pair Corralation between A1KA34 and Dow Jones
Assuming the 90 days trading horizon A1KA34 is expected to generate 2.4 times more return on investment than Dow Jones. However, A1KA34 is 2.4 times more volatile than Dow Jones Industrial. It trades about 0.04 of its potential returns per unit of risk. Dow Jones Industrial is currently generating about 0.08 per unit of risk. If you would invest 3,879 in A1KA34 on September 13, 2024 and sell it today you would earn a total of 1,011 from holding A1KA34 or generate 26.06% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 99.8% |
| Values | Daily Returns |
A1KA34 vs. Dow Jones Industrial
Performance |
| Timeline |
A1KA34 and Dow Jones Volatility Contrast
Predicted Return Density |
| Returns |
A1KA34
Pair trading matchups for A1KA34
Dow Jones Industrial
Pair trading matchups for Dow Jones
Pair Trading with A1KA34 and Dow Jones
The main advantage of trading using opposite A1KA34 and Dow Jones positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if A1KA34 position performs unexpectedly, Dow Jones can make up some of the losses. Pair trading also minimizes risk from directional movements in the market. For example, if an entire industry or sector drops because of unexpected headlines, the short position in Dow Jones will offset losses from the drop in Dow Jones' long position.| A1KA34 vs. The Home Depot | A1KA34 vs. Tres Tentos Agroindustrial | A1KA34 vs. salesforce inc | A1KA34 vs. Apartment Investment and |
| Dow Jones vs. ChampionX | Dow Jones vs. Highway Holdings Limited | Dow Jones vs. Westinghouse Air Brake | Dow Jones vs. Cementos Pacasmayo SAA |
Check out your portfolio center.Note that this page's information should be used as a complementary analysis to find the right mix of equity instruments to add to your existing portfolios or create a brand new portfolio. You can also try the Equity Valuation module to check real value of public entities based on technical and fundamental data.
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