Correlation Between Klondike Gold and Dow Jones
Can any of the company-specific risk be diversified away by investing in both Klondike Gold 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 Klondike Gold and Dow Jones into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Klondike Gold Corp and Dow Jones Industrial, you can compare the effects of market volatilities on Klondike Gold 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 Klondike Gold with a short position of Dow Jones. Check out your portfolio center. Please also check ongoing floating volatility patterns of Klondike Gold and Dow Jones.
Diversification Opportunities for Klondike Gold and Dow Jones
0.21 | Correlation Coefficient |
Modest diversification
The 3 months correlation between Klondike and Dow is 0.21. Overlapping area represents the amount of risk that can be diversified away by holding Klondike Gold Corp 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 Klondike Gold 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 Klondike Gold Corp 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 Klondike Gold i.e., Klondike Gold and Dow Jones go up and down completely randomly.
Pair Corralation between Klondike Gold and Dow Jones
Assuming the 90 days horizon Klondike Gold Corp is expected to under-perform the Dow Jones. In addition to that, Klondike Gold is 18.25 times more volatile than Dow Jones Industrial. It trades about -0.01 of its total potential returns per unit of risk. Dow Jones Industrial is currently generating about 0.3 per unit of volatility. If you would invest 4,270,656 in Dow Jones Industrial on November 5, 2024 and sell it today you would earn a total of 183,810 from holding Dow Jones Industrial or generate 4.3% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Klondike Gold Corp vs. Dow Jones Industrial
Performance |
| Timeline |
Klondike Gold and Dow Jones Volatility Contrast
Predicted Return Density |
| Returns |
Klondike Gold Corp
Pair trading matchups for Klondike Gold
Dow Jones Industrial
Pair trading matchups for Dow Jones
Pair Trading with Klondike Gold and Dow Jones
The main advantage of trading using opposite Klondike Gold and Dow Jones positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Klondike Gold 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.| Klondike Gold vs. Puma Exploration | Klondike Gold vs. Sixty North Gold | Klondike Gold vs. Red Pine Exploration | Klondike Gold vs. Grande Portage Resources |
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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 My Watchlist Analysis module to analyze my current watchlist and to refresh optimization strategy. Macroaxis watchlist is based on self-learning algorithm to remember stocks you like.
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