Correlation Between Dow Jones and Keyence
Can any of the company-specific risk be diversified away by investing in both Dow Jones and Keyence 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 Keyence 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 Keyence, you can compare the effects of market volatilities on Dow Jones and Keyence 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 Keyence. Check out your portfolio center. Please also check ongoing floating volatility patterns of Dow Jones and Keyence.
Diversification Opportunities for Dow Jones and Keyence
Excellent diversification
The 3 months correlation between Dow and Keyence is -0.57. Overlapping area represents the amount of risk that can be diversified away by holding Dow Jones Industrial and Keyence in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Keyence 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 Keyence. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Keyence has no effect on the direction of Dow Jones i.e., Dow Jones and Keyence go up and down completely randomly.
Pair Corralation between Dow Jones and Keyence
Assuming the 90 days trading horizon Dow Jones Industrial is expected to generate 0.46 times more return on investment than Keyence. However, Dow Jones Industrial is 2.19 times less risky than Keyence. It trades about 0.27 of its potential returns per unit of risk. Keyence is currently generating about -0.05 per unit of risk. If you would invest 4,238,757 in Dow Jones Industrial on August 29, 2024 and sell it today you would earn a total of 247,274 from holding Dow Jones Industrial or generate 5.83% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Dow Jones Industrial vs. Keyence
Performance |
| Timeline |
Dow Jones and Keyence Volatility Contrast
Predicted Return Density |
| Returns |
Dow Jones Industrial
Pair trading matchups for Dow Jones
Keyence
Pair trading matchups for Keyence
Pair Trading with Dow Jones and Keyence
The main advantage of trading using opposite Dow Jones and Keyence positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Dow Jones position performs unexpectedly, Keyence 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 Keyence will offset losses from the drop in Keyence's long position.| Dow Jones vs. CECO Environmental Corp | Dow Jones vs. Western Acquisition Ventures | Dow Jones vs. Tyson Foods | Dow Jones vs. Inflection Point Acquisition |
| Keyence vs. Garmin | Keyence vs. Keysight Technologies | Keyence vs. Fortive Corp | Keyence vs. Teledyne Technologies Incorporated |
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 Instant Ratings module to determine any equity ratings based on digital recommendations. Macroaxis instant equity ratings are based on combination of fundamental analysis and risk-adjusted market performance.
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