Correlation Between Dow Jones and Akoustis Technologies
Can any of the company-specific risk be diversified away by investing in both Dow Jones and Akoustis Technologies 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 Akoustis Technologies 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 Akoustis Technologies, you can compare the effects of market volatilities on Dow Jones and Akoustis Technologies 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 Akoustis Technologies. Check out your portfolio center. Please also check ongoing floating volatility patterns of Dow Jones and Akoustis Technologies.
Diversification Opportunities for Dow Jones and Akoustis Technologies
-0.12 | Correlation Coefficient |
Good diversification
The 3 months correlation between Dow and Akoustis is -0.12. Overlapping area represents the amount of risk that can be diversified away by holding Dow Jones Industrial and Akoustis Technologies in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Akoustis Technologies 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 Akoustis Technologies. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Akoustis Technologies has no effect on the direction of Dow Jones i.e., Dow Jones and Akoustis Technologies go up and down completely randomly.
Pair Corralation between Dow Jones and Akoustis Technologies
Assuming the 90 days trading horizon Dow Jones is expected to generate 8.66 times less return on investment than Akoustis Technologies. But when comparing it to its historical volatility, Dow Jones Industrial is 11.08 times less risky than Akoustis Technologies. It trades about 0.27 of its potential returns per unit of risk. Akoustis Technologies is currently generating about 0.21 of returns per unit of risk over similar time horizon. If you would invest 6.70 in Akoustis Technologies on August 28, 2024 and sell it today you would earn a total of 3.10 from holding Akoustis Technologies or generate 46.27% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Dow Jones Industrial vs. Akoustis Technologies
Performance |
| Timeline |
Dow Jones and Akoustis Technologies Volatility Contrast
Predicted Return Density |
| Returns |
Dow Jones Industrial
Pair trading matchups for Dow Jones
Akoustis Technologies
Pair trading matchups for Akoustis Technologies
Pair Trading with Dow Jones and Akoustis Technologies
The main advantage of trading using opposite Dow Jones and Akoustis Technologies positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Dow Jones position performs unexpectedly, Akoustis Technologies 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 Akoustis Technologies will offset losses from the drop in Akoustis Technologies' long position.| Dow Jones vs. CECO Environmental Corp | Dow Jones vs. Western Acquisition Ventures | Dow Jones vs. Tyson Foods | Dow Jones vs. Inflection Point Acquisition |
| Akoustis Technologies vs. Aviat Networks | Akoustis Technologies vs. AudioCodes | Akoustis Technologies vs. Silicom | Akoustis Technologies vs. Gilat Satellite Networks |
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 Portfolio Volatility module to check portfolio volatility and analyze historical return density to properly model market risk.
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