Correlation Between Dow Jones and Krispy Kreme
Can any of the company-specific risk be diversified away by investing in both Dow Jones and Krispy Kreme 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 Krispy Kreme 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 Krispy Kreme, you can compare the effects of market volatilities on Dow Jones and Krispy Kreme 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 Krispy Kreme. Check out your portfolio center. Please also check ongoing floating volatility patterns of Dow Jones and Krispy Kreme.
Diversification Opportunities for Dow Jones and Krispy Kreme
-0.04 | Correlation Coefficient |
Good diversification
The 3 months correlation between Dow and Krispy is -0.04. Overlapping area represents the amount of risk that can be diversified away by holding Dow Jones Industrial and Krispy Kreme in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Krispy Kreme 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 Krispy Kreme. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Krispy Kreme has no effect on the direction of Dow Jones i.e., Dow Jones and Krispy Kreme go up and down completely randomly.
Pair Corralation between Dow Jones and Krispy Kreme
Assuming the 90 days trading horizon Dow Jones Industrial is expected to generate 0.24 times more return on investment than Krispy Kreme. However, Dow Jones Industrial is 4.11 times less risky than Krispy Kreme. It trades about 0.08 of its potential returns per unit of risk. Krispy Kreme is currently generating about -0.01 per unit of risk. If you would invest 3,394,710 in Dow Jones Industrial on August 26, 2024 and sell it today you would earn a total of 1,034,941 from holding Dow Jones Industrial or generate 30.49% 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. Krispy Kreme
Performance |
| Timeline |
Dow Jones and Krispy Kreme Volatility Contrast
Predicted Return Density |
| Returns |
Dow Jones Industrial
Pair trading matchups for Dow Jones
Krispy Kreme
Pair trading matchups for Krispy Kreme
Pair Trading with Dow Jones and Krispy Kreme
The main advantage of trading using opposite Dow Jones and Krispy Kreme positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Dow Jones position performs unexpectedly, Krispy Kreme 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 Krispy Kreme will offset losses from the drop in Krispy Kreme's long position.| Dow Jones vs. MI Homes | Dow Jones vs. Franklin Street Properties | Dow Jones vs. Summit Hotel Properties | Dow Jones vs. Portillos |
| Krispy Kreme vs. Sendas Distribuidora SA | Krispy Kreme vs. Natural Grocers by | Krispy Kreme vs. Sprouts Farmers Market | Krispy Kreme vs. Albertsons Companies |
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 My Watchlist Analysis module to analyze my current watchlist and to refresh optimization strategy. Macroaxis watchlist is based on self-learning algorithm to remember stocks you like.
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