Correlation Between KAT Exploration and Dow Jones
Can any of the company-specific risk be diversified away by investing in both KAT Exploration and Dow Jones 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 KAT Exploration and Dow Jones into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between KAT Exploration and Dow Jones Industrial, you can compare the effects of market volatilities on KAT Exploration and Dow Jones 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 KAT Exploration with a short position of Dow Jones. Check out your portfolio center. Please also check ongoing floating volatility patterns of KAT Exploration and Dow Jones.
Diversification Opportunities for KAT Exploration and Dow Jones
-0.53 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between KAT and Dow is -0.53. Overlapping area represents the amount of risk that can be diversified away by holding KAT Exploration and Dow Jones Industrial in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Dow Jones Industrial and KAT Exploration 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 KAT Exploration are associated (or correlated) with Dow Jones. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Dow Jones Industrial has no effect on the direction of KAT Exploration i.e., KAT Exploration and Dow Jones go up and down completely randomly.
Pair Corralation between KAT Exploration and Dow Jones
Given the investment horizon of 90 days KAT Exploration is expected to under-perform the Dow Jones. In addition to that, KAT Exploration is 22.12 times more volatile than Dow Jones Industrial. It trades about -0.06 of its total potential returns per unit of risk. Dow Jones Industrial is currently generating about 0.34 per unit of volatility. If you would invest 4,205,219 in Dow Jones Industrial on September 2, 2024 and sell it today you would earn a total of 285,846 from holding Dow Jones Industrial or generate 6.8% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
KAT Exploration vs. Dow Jones Industrial
Performance |
| Timeline |
KAT Exploration and Dow Jones Volatility Contrast
Predicted Return Density |
| Returns |
KAT Exploration
Pair trading matchups for KAT Exploration
Dow Jones Industrial
Pair trading matchups for Dow Jones
Pair Trading with KAT Exploration and Dow Jones
The main advantage of trading using opposite KAT Exploration and Dow Jones positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if KAT Exploration position performs unexpectedly, Dow Jones 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 Dow Jones will offset losses from the drop in Dow Jones' long position.| KAT Exploration vs. South32 Limited | KAT Exploration vs. NioCorp Developments Ltd | KAT Exploration vs. HUMANA INC | KAT Exploration vs. SCOR PK |
| Dow Jones vs. Dream Finders Homes | Dow Jones vs. GEN Restaurant Group, | Dow Jones vs. National Beverage Corp | Dow Jones vs. BJs Restaurants |
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 Bond Analysis module to evaluate and analyze corporate bonds as a potential investment for your portfolios..
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