Correlation Between AKD Hospitality and Dow Jones
Can any of the company-specific risk be diversified away by investing in both AKD Hospitality 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 AKD Hospitality and Dow Jones into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between AKD Hospitality and Dow Jones Industrial, you can compare the effects of market volatilities on AKD Hospitality 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 AKD Hospitality with a short position of Dow Jones. Check out your portfolio center. Please also check ongoing floating volatility patterns of AKD Hospitality and Dow Jones.
Diversification Opportunities for AKD Hospitality and Dow Jones
0.48 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between AKD and Dow is 0.48. Overlapping area represents the amount of risk that can be diversified away by holding AKD Hospitality 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 AKD Hospitality 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 AKD Hospitality 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 AKD Hospitality i.e., AKD Hospitality and Dow Jones go up and down completely randomly.
Pair Corralation between AKD Hospitality and Dow Jones
Assuming the 90 days trading horizon AKD Hospitality is expected to generate 1.39 times more return on investment than Dow Jones. However, AKD Hospitality is 1.39 times more volatile than Dow Jones Industrial. It trades about -0.01 of its potential returns per unit of risk. Dow Jones Industrial is currently generating about -0.1 per unit of risk. If you would invest 15,135 in AKD Hospitality on January 17, 2025 and sell it today you would lose (389.00) from holding AKD Hospitality or give up 2.57% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 77.78% |
| Values | Daily Returns |
AKD Hospitality vs. Dow Jones Industrial
Performance |
| Timeline |
AKD Hospitality and Dow Jones Volatility Contrast
Predicted Return Density |
| Returns |
AKD Hospitality
Pair trading matchups for AKD Hospitality
Dow Jones Industrial
Pair trading matchups for Dow Jones
Pair Trading with AKD Hospitality and Dow Jones
The main advantage of trading using opposite AKD Hospitality and Dow Jones positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if AKD Hospitality 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.| AKD Hospitality vs. Shifa International Hospitals | AKD Hospitality vs. IBL HealthCare | AKD Hospitality vs. Ittehad Chemicals | AKD Hospitality vs. Engro Poly |
| Dow Jones vs. Texas Roadhouse | Dow Jones vs. The Wendys Co | Dow Jones vs. Stanley Black Decker | Dow Jones vs. Procter Gamble |
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 Forecasting module to use basic forecasting models to generate price predictions and determine price momentum.
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