Correlation Between Dow Jones and First Keystone
Can any of the company-specific risk be diversified away by investing in both Dow Jones and First Keystone 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 First Keystone 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 First Keystone Corp, you can compare the effects of market volatilities on Dow Jones and First Keystone 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 First Keystone. Check out your portfolio center. Please also check ongoing floating volatility patterns of Dow Jones and First Keystone.
Diversification Opportunities for Dow Jones and First Keystone
0.75 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Dow and First is 0.75. Overlapping area represents the amount of risk that can be diversified away by holding Dow Jones Industrial and First Keystone Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on First Keystone Corp 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 First Keystone. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of First Keystone Corp has no effect on the direction of Dow Jones i.e., Dow Jones and First Keystone go up and down completely randomly.
Pair Corralation between Dow Jones and First Keystone
Assuming the 90 days trading horizon Dow Jones is expected to generate 1.69 times less return on investment than First Keystone. But when comparing it to its historical volatility, Dow Jones Industrial is 3.52 times less risky than First Keystone. It trades about 0.16 of its potential returns per unit of risk. First Keystone Corp is currently generating about 0.08 of returns per unit of risk over similar time horizon. If you would invest 1,243 in First Keystone Corp on August 29, 2024 and sell it today you would earn a total of 286.00 from holding First Keystone Corp or generate 23.01% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 97.6% |
| Values | Daily Returns |
Dow Jones Industrial vs. First Keystone Corp
Performance |
| Timeline |
Dow Jones and First Keystone Volatility Contrast
Predicted Return Density |
| Returns |
Dow Jones Industrial
Pair trading matchups for Dow Jones
First Keystone Corp
Pair trading matchups for First Keystone
Pair Trading with Dow Jones and First Keystone
The main advantage of trading using opposite Dow Jones and First Keystone positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Dow Jones position performs unexpectedly, First Keystone 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 First Keystone will offset losses from the drop in First Keystone's 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 |
| First Keystone vs. Invesco High Income | First Keystone vs. Blackrock Muniholdings Ny | First Keystone vs. MFS Investment Grade | First Keystone vs. Federated Premier Municipal |
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 Cryptocurrency Center module to build and monitor diversified portfolio of extremely risky digital assets and cryptocurrency.
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