Correlation Between Dow Jones and KRAFT
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By analyzing existing cross correlation between Dow Jones Industrial and KRAFT FOODS GROUP, you can compare the effects of market volatilities on Dow Jones and KRAFT 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 KRAFT. Check out your portfolio center. Please also check ongoing floating volatility patterns of Dow Jones and KRAFT.
Diversification Opportunities for Dow Jones and KRAFT
Pay attention - limited upside
The 3 months correlation between Dow and KRAFT is -0.71. Overlapping area represents the amount of risk that can be diversified away by holding Dow Jones Industrial and KRAFT FOODS GROUP in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on KRAFT FOODS GROUP 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 KRAFT. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of KRAFT FOODS GROUP has no effect on the direction of Dow Jones i.e., Dow Jones and KRAFT go up and down completely randomly.
Pair Corralation between Dow Jones and KRAFT
Assuming the 90 days trading horizon Dow Jones Industrial is expected to generate 0.77 times more return on investment than KRAFT. However, Dow Jones Industrial is 1.29 times less risky than KRAFT. It trades about 0.17 of its potential returns per unit of risk. KRAFT FOODS GROUP is currently generating about 0.03 per unit of risk. If you would invest 3,811,148 in Dow Jones Industrial on August 28, 2024 and sell it today you would earn a total of 662,509 from holding Dow Jones Industrial or generate 17.38% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 84.0% |
| Values | Daily Returns |
Dow Jones Industrial vs. KRAFT FOODS GROUP
Performance |
| Timeline |
Dow Jones and KRAFT Volatility Contrast
Predicted Return Density |
| Returns |
Dow Jones Industrial
Pair trading matchups for Dow Jones
KRAFT FOODS GROUP
Pair trading matchups for KRAFT
Pair Trading with Dow Jones and KRAFT
The main advantage of trading using opposite Dow Jones and KRAFT positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Dow Jones position performs unexpectedly, KRAFT 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 KRAFT will offset losses from the drop in KRAFT's long position.| Dow Jones vs. Meiwu Technology Co | Dow Jones vs. 17 Education Technology | Dow Jones vs. 51Talk Online Education | Dow Jones vs. Afya |
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 USA ETFs module to find actively traded Exchange Traded Funds (ETF) in USA.
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