Correlation Between Dow Jones and Kopernik Global
Can any of the company-specific risk be diversified away by investing in both Dow Jones and Kopernik Global 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 Kopernik Global 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 Kopernik Global All Cap, you can compare the effects of market volatilities on Dow Jones and Kopernik Global 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 Kopernik Global. Check out your portfolio center. Please also check ongoing floating volatility patterns of Dow Jones and Kopernik Global.
Diversification Opportunities for Dow Jones and Kopernik Global
0.68 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Dow and Kopernik is 0.68. Overlapping area represents the amount of risk that can be diversified away by holding Dow Jones Industrial and Kopernik Global All Cap in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Kopernik Global All 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 Kopernik Global. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Kopernik Global All has no effect on the direction of Dow Jones i.e., Dow Jones and Kopernik Global go up and down completely randomly.
Pair Corralation between Dow Jones and Kopernik Global
Assuming the 90 days trading horizon Dow Jones Industrial is expected to under-perform the Kopernik Global. But the index apears to be less risky and, when comparing its historical volatility, Dow Jones Industrial is 1.03 times less risky than Kopernik Global. The index trades about -0.19 of its potential returns per unit of risk. The Kopernik Global All Cap is currently generating about 0.31 of returns per unit of risk over similar time horizon. If you would invest 1,138 in Kopernik Global All Cap on November 28, 2024 and sell it today you would earn a total of 48.00 from holding Kopernik Global All Cap or generate 4.22% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Dow Jones Industrial vs. Kopernik Global All Cap
Performance |
| Timeline |
Dow Jones and Kopernik Global Volatility Contrast
Predicted Return Density |
| Returns |
Dow Jones Industrial
Pair trading matchups for Dow Jones
Kopernik Global All Cap
Pair trading matchups for Kopernik Global
Pair Trading with Dow Jones and Kopernik Global
The main advantage of trading using opposite Dow Jones and Kopernik Global positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Dow Jones position performs unexpectedly, Kopernik Global 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 Kopernik Global will offset losses from the drop in Kopernik Global's long position.| Dow Jones vs. Gladstone Investment | Dow Jones vs. BW Offshore Limited | Dow Jones vs. Fidus Investment Corp | Dow Jones vs. Aperture Health |
| Kopernik Global vs. Alpine High Yield | Kopernik Global vs. Metropolitan West High | Kopernik Global vs. Gmo High Yield | Kopernik Global vs. Intal High Relative |
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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