Correlation Between Dow Jones and Kone Oyj
Can any of the company-specific risk be diversified away by investing in both Dow Jones and Kone Oyj 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 Kone Oyj 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 Kone Oyj ADR, you can compare the effects of market volatilities on Dow Jones and Kone Oyj 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 Kone Oyj. Check out your portfolio center. Please also check ongoing floating volatility patterns of Dow Jones and Kone Oyj.
Diversification Opportunities for Dow Jones and Kone Oyj
Good diversification
The 3 months correlation between Dow and Kone is -0.09. Overlapping area represents the amount of risk that can be diversified away by holding Dow Jones Industrial and Kone Oyj ADR in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Kone Oyj ADR 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 Kone Oyj. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Kone Oyj ADR has no effect on the direction of Dow Jones i.e., Dow Jones and Kone Oyj go up and down completely randomly.
Pair Corralation between Dow Jones and Kone Oyj
Assuming the 90 days trading horizon Dow Jones Industrial is expected to generate 0.63 times more return on investment than Kone Oyj. However, Dow Jones Industrial is 1.59 times less risky than Kone Oyj. It trades about 0.21 of its potential returns per unit of risk. Kone Oyj ADR is currently generating about -0.24 per unit of risk. If you would invest 4,237,436 in Dow Jones Industrial on August 25, 2024 and sell it today you would earn a total of 192,215 from holding Dow Jones Industrial or generate 4.54% 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. Kone Oyj ADR
Performance |
| Timeline |
Dow Jones and Kone Oyj Volatility Contrast
Predicted Return Density |
| Returns |
Dow Jones Industrial
Pair trading matchups for Dow Jones
Kone Oyj ADR
Pair trading matchups for Kone Oyj
Pair Trading with Dow Jones and Kone Oyj
The main advantage of trading using opposite Dow Jones and Kone Oyj positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Dow Jones position performs unexpectedly, Kone Oyj 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 Kone Oyj will offset losses from the drop in Kone Oyj's long position.| Dow Jones vs. Vistra Energy Corp | Dow Jones vs. Fluence Energy | Dow Jones vs. Old Republic International | Dow Jones vs. Empresa Distribuidora y |
| Kone Oyj vs. Aumann AG | Kone Oyj vs. Arista Power | Kone Oyj vs. Atlas Copco AB | Kone Oyj vs. American Commerce Solutions |
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 Insider Screener module to find insiders across different sectors to evaluate their impact on performance.
Other Complementary Tools
| Crypto Correlations Use cryptocurrency correlation module to diversify your cryptocurrency portfolio across multiple coins | |
| Economic Indicators Top statistical indicators that provide insights into how an economy is performing | |
| Price Exposure Probability Analyze equity upside and downside potential for a given time horizon across multiple markets | |
| Headlines Timeline Stay connected to all market stories and filter out noise. Drill down to analyze hype elasticity | |
| Price Transformation Use Price Transformation models to analyze the depth of different equity instruments across global markets |