Correlation Between KBC Groep and Dow Jones
Can any of the company-specific risk be diversified away by investing in both KBC Groep 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 KBC Groep and Dow Jones into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between KBC Groep NV and Dow Jones Industrial, you can compare the effects of market volatilities on KBC Groep 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 KBC Groep with a short position of Dow Jones. Check out your portfolio center. Please also check ongoing floating volatility patterns of KBC Groep and Dow Jones.
Diversification Opportunities for KBC Groep and Dow Jones
Very good diversification
The 3 months correlation between KBC and Dow is -0.25. Overlapping area represents the amount of risk that can be diversified away by holding KBC Groep NV 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 KBC Groep 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 KBC Groep NV 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 KBC Groep i.e., KBC Groep and Dow Jones go up and down completely randomly.
Pair Corralation between KBC Groep and Dow Jones
Assuming the 90 days horizon KBC Groep is expected to generate 1.35 times less return on investment than Dow Jones. In addition to that, KBC Groep is 1.46 times more volatile than Dow Jones Industrial. It trades about 0.08 of its total potential returns per unit of risk. Dow Jones Industrial is currently generating about 0.15 per unit of volatility. If you would invest 4,251,495 in Dow Jones Industrial on August 24, 2024 and sell it today you would earn a total of 135,540 from holding Dow Jones Industrial or generate 3.19% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 95.65% |
| Values | Daily Returns |
KBC Groep NV vs. Dow Jones Industrial
Performance |
| Timeline |
KBC Groep and Dow Jones Volatility Contrast
Predicted Return Density |
| Returns |
KBC Groep NV
Pair trading matchups for KBC Groep
Dow Jones Industrial
Pair trading matchups for Dow Jones
Pair Trading with KBC Groep and Dow Jones
The main advantage of trading using opposite KBC Groep and Dow Jones positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if KBC Groep 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.| KBC Groep vs. DBS Group Holdings | KBC Groep vs. United Overseas Bank | KBC Groep vs. Overseas Chinese Banking | KBC Groep vs. China Minsh |
| Dow Jones vs. Sphere Entertainment Co | Dow Jones vs. Perseus Mining Limited | Dow Jones vs. Titan Machinery | Dow Jones vs. Simon Property Group |
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 Options Analysis module to analyze and evaluate options and option chains as a potential hedge for your portfolios.
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