Correlation Between KEY and DUSK
Can any of the company-specific risk be diversified away by investing in both KEY and DUSK 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 KEY and DUSK into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between KEY and DUSK, you can compare the effects of market volatilities on KEY and DUSK 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 KEY with a short position of DUSK. Check out your portfolio center. Please also check ongoing floating volatility patterns of KEY and DUSK.
Diversification Opportunities for KEY and DUSK
Modest diversification
The 3 months correlation between KEY and DUSK is 0.22. Overlapping area represents the amount of risk that can be diversified away by holding KEY and DUSK in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on DUSK and KEY 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 KEY are associated (or correlated) with DUSK. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of DUSK has no effect on the direction of KEY i.e., KEY and DUSK go up and down completely randomly.
Pair Corralation between KEY and DUSK
Assuming the 90 days trading horizon KEY is expected to under-perform the DUSK. In addition to that, KEY is 1.77 times more volatile than DUSK. It trades about -0.11 of its total potential returns per unit of risk. DUSK is currently generating about 0.52 per unit of volatility. If you would invest 17.00 in DUSK on September 4, 2024 and sell it today you would earn a total of 12.00 from holding DUSK or generate 70.59% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
KEY vs. DUSK
Performance |
| Timeline |
| KEY |
| DUSK |
KEY and DUSK Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with KEY and DUSK
The main advantage of trading using opposite KEY and DUSK positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if KEY position performs unexpectedly, DUSK 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 DUSK will offset losses from the drop in DUSK's long position.The idea behind KEY and DUSK pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.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 Efficient Frontier module to plot and analyze your portfolio and positions against risk-return landscape of the market..
Other Complementary Tools
| Money Flow Index Determine momentum by analyzing Money Flow Index and other technical indicators | |
| Price Ceiling Movement Calculate and plot Price Ceiling Movement for different equity instruments | |
| USA ETFs Find actively traded Exchange Traded Funds (ETF) in USA | |
| Efficient Frontier Plot and analyze your portfolio and positions against risk-return landscape of the market. | |
| Price Exposure Probability Analyze equity upside and downside potential for a given time horizon across multiple markets |