Correlation Between Dow Jones and Kulicke
Can any of the company-specific risk be diversified away by investing in both Dow Jones and Kulicke 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 Kulicke 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 Kulicke and Soffa, you can compare the effects of market volatilities on Dow Jones and Kulicke 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 Kulicke. Check out your portfolio center. Please also check ongoing floating volatility patterns of Dow Jones and Kulicke.
Diversification Opportunities for Dow Jones and Kulicke
Very poor diversification
The 3 months correlation between Dow and Kulicke is 0.86. Overlapping area represents the amount of risk that can be diversified away by holding Dow Jones Industrial and Kulicke and Soffa in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Kulicke and Soffa 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 Kulicke. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Kulicke and Soffa has no effect on the direction of Dow Jones i.e., Dow Jones and Kulicke go up and down completely randomly.
Pair Corralation between Dow Jones and Kulicke
Assuming the 90 days trading horizon Dow Jones Industrial is expected to generate 0.44 times more return on investment than Kulicke. However, Dow Jones Industrial is 2.28 times less risky than Kulicke. It trades about 0.29 of its potential returns per unit of risk. Kulicke and Soffa is currently generating about 0.07 per unit of risk. If you would invest 4,214,154 in Dow Jones Industrial on August 31, 2024 and sell it today you would earn a total of 258,052 from holding Dow Jones Industrial or generate 6.12% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Dow Jones Industrial vs. Kulicke and Soffa
Performance |
| Timeline |
Dow Jones and Kulicke Volatility Contrast
Predicted Return Density |
| Returns |
Dow Jones Industrial
Pair trading matchups for Dow Jones
Kulicke and Soffa
Pair trading matchups for Kulicke
Pair Trading with Dow Jones and Kulicke
The main advantage of trading using opposite Dow Jones and Kulicke positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Dow Jones position performs unexpectedly, Kulicke 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 Kulicke will offset losses from the drop in Kulicke's long position.| Dow Jones vs. Aerofoam Metals | Dow Jones vs. ACG Metals Limited | Dow Jones vs. China Clean Energy | Dow Jones vs. Fast Retailing Co |
| Kulicke vs. Ultra Clean Holdings | Kulicke vs. Ichor Holdings | Kulicke vs. Entegris | Kulicke vs. Amtech Systems |
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 Earnings Calls module to check upcoming earnings announcements updated hourly across public exchanges.
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