Correlation Between Dow Jones and KVH Industries
Can any of the company-specific risk be diversified away by investing in both Dow Jones and KVH Industries 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 KVH Industries 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 KVH Industries, you can compare the effects of market volatilities on Dow Jones and KVH Industries 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 KVH Industries. Check out your portfolio center. Please also check ongoing floating volatility patterns of Dow Jones and KVH Industries.
Diversification Opportunities for Dow Jones and KVH Industries
0.28 | Correlation Coefficient |
Modest diversification
The 3 months correlation between Dow and KVH is 0.28. Overlapping area represents the amount of risk that can be diversified away by holding Dow Jones Industrial and KVH Industries in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on KVH Industries 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 KVH Industries. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of KVH Industries has no effect on the direction of Dow Jones i.e., Dow Jones and KVH Industries go up and down completely randomly.
Pair Corralation between Dow Jones and KVH Industries
Assuming the 90 days trading horizon Dow Jones is expected to generate 4.59 times less return on investment than KVH Industries. But when comparing it to its historical volatility, Dow Jones Industrial is 2.3 times less risky than KVH Industries. It trades about 0.17 of its potential returns per unit of risk. KVH Industries is currently generating about 0.34 of returns per unit of risk over similar time horizon. If you would invest 528.00 in KVH Industries on October 20, 2024 and sell it today you would earn a total of 65.00 from holding KVH Industries or generate 12.31% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 95.24% |
| Values | Daily Returns |
Dow Jones Industrial vs. KVH Industries
Performance |
| Timeline |
Dow Jones and KVH Industries Volatility Contrast
Predicted Return Density |
| Returns |
Dow Jones Industrial
Pair trading matchups for Dow Jones
KVH Industries
Pair trading matchups for KVH Industries
Pair Trading with Dow Jones and KVH Industries
The main advantage of trading using opposite Dow Jones and KVH Industries positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Dow Jones position performs unexpectedly, KVH Industries 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 KVH Industries will offset losses from the drop in KVH Industries' long position.| Dow Jones vs. SkyWest | Dow Jones vs. Air Transport Services | Dow Jones vs. LATAM Airlines Group | Dow Jones vs. Emerson Radio |
| KVH Industries vs. Telesat Corp | KVH Industries vs. Comtech Telecommunications Corp | KVH Industries vs. Knowles Cor | KVH Industries vs. Ituran Location and |
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 Anywhere module to track or share privately all of your investments from the convenience of any device.
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