Correlation Between Dow Jones and Know Labs
Can any of the company-specific risk be diversified away by investing in both Dow Jones and Know Labs 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 Know Labs 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 Know Labs, you can compare the effects of market volatilities on Dow Jones and Know Labs 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 Know Labs. Check out your portfolio center. Please also check ongoing floating volatility patterns of Dow Jones and Know Labs.
Diversification Opportunities for Dow Jones and Know Labs
Excellent diversification
The 3 months correlation between Dow and Know is -0.65. Overlapping area represents the amount of risk that can be diversified away by holding Dow Jones Industrial and Know Labs in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Know Labs 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 Know Labs. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Know Labs has no effect on the direction of Dow Jones i.e., Dow Jones and Know Labs go up and down completely randomly.
Pair Corralation between Dow Jones and Know Labs
Assuming the 90 days trading horizon Dow Jones is expected to generate 2.04 times less return on investment than Know Labs. But when comparing it to its historical volatility, Dow Jones Industrial is 5.1 times less risky than Know Labs. It trades about 0.26 of its potential returns per unit of risk. Know Labs is currently generating about 0.11 of returns per unit of risk over similar time horizon. If you would invest 22.00 in Know Labs on August 28, 2024 and sell it today you would earn a total of 2.00 from holding Know Labs or generate 9.09% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Dow Jones Industrial vs. Know Labs
Performance |
| Timeline |
Dow Jones and Know Labs Volatility Contrast
Predicted Return Density |
| Returns |
Dow Jones Industrial
Pair trading matchups for Dow Jones
Know Labs
Pair trading matchups for Know Labs
Pair Trading with Dow Jones and Know Labs
The main advantage of trading using opposite Dow Jones and Know Labs positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Dow Jones position performs unexpectedly, Know Labs 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 Know Labs will offset losses from the drop in Know Labs' long position.| Dow Jones vs. Meiwu Technology Co | Dow Jones vs. 17 Education Technology | Dow Jones vs. 51Talk Online Education | Dow Jones vs. Afya |
| Know Labs vs. Wearable Devices | Know Labs vs. Yoshiharu Global Co | Know Labs vs. bioAffinity Technologies, | Know Labs vs. Jianzhi Education Technology |
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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