Correlation Between Dow Jones and Kinnevik Investment
Can any of the company-specific risk be diversified away by investing in both Dow Jones and Kinnevik Investment 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 Dow Jones and Kinnevik Investment into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Dow Jones Industrial and Kinnevik Investment AB, you can compare the effects of market volatilities on Dow Jones and Kinnevik Investment 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 Dow Jones with a short position of Kinnevik Investment. Check out your portfolio center. Please also check ongoing floating volatility patterns of Dow Jones and Kinnevik Investment.
Diversification Opportunities for Dow Jones and Kinnevik Investment
0.35 | Correlation Coefficient |
Weak diversification
The 3 months correlation between Dow and Kinnevik is 0.35. Overlapping area represents the amount of risk that can be diversified away by holding Dow Jones Industrial and Kinnevik Investment AB in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Kinnevik Investment and Dow Jones 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 Dow Jones Industrial are associated (or correlated) with Kinnevik Investment. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Kinnevik Investment has no effect on the direction of Dow Jones i.e., Dow Jones and Kinnevik Investment go up and down completely randomly.
Pair Corralation between Dow Jones and Kinnevik Investment
Assuming the 90 days trading horizon Dow Jones is expected to generate 2.35 times less return on investment than Kinnevik Investment. But when comparing it to its historical volatility, Dow Jones Industrial is 3.17 times less risky than Kinnevik Investment. It trades about 0.42 of its potential returns per unit of risk. Kinnevik Investment AB is currently generating about 0.31 of returns per unit of risk over similar time horizon. If you would invest 7,655 in Kinnevik Investment AB on November 2, 2024 and sell it today you would earn a total of 1,188 from holding Kinnevik Investment AB or generate 15.52% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 90.48% |
| Values | Daily Returns |
Dow Jones Industrial vs. Kinnevik Investment AB
Performance |
| Timeline |
Dow Jones and Kinnevik Investment Volatility Contrast
Predicted Return Density |
| Returns |
Dow Jones Industrial
Pair trading matchups for Dow Jones
Kinnevik Investment AB
Pair trading matchups for Kinnevik Investment
Pair Trading with Dow Jones and Kinnevik Investment
The main advantage of trading using opposite Dow Jones and Kinnevik Investment positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Dow Jones position performs unexpectedly, Kinnevik Investment 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 Kinnevik Investment will offset losses from the drop in Kinnevik Investment's long position.| Dow Jones vs. Boston Properties | Dow Jones vs. Suntory Beverage Food | Dow Jones vs. Envista Holdings Corp | Dow Jones vs. Fevertree Drinks Plc |
| Kinnevik Investment vs. Morgan Advanced Materials | Kinnevik Investment vs. Atresmedia | Kinnevik Investment vs. Zinc Media Group | Kinnevik Investment vs. Pets at Home |
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 Theme Ratings module to determine theme ratings based on digital equity recommendations. Macroaxis theme ratings are based on combination of fundamental analysis and risk-adjusted market performance.
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