Correlation Between Kinetics Market and Dow Jones
Can any of the company-specific risk be diversified away by investing in both Kinetics Market 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 Kinetics Market and Dow Jones into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Kinetics Market Opportunities and Dow Jones Industrial, you can compare the effects of market volatilities on Kinetics Market 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 Kinetics Market with a short position of Dow Jones. Check out your portfolio center. Please also check ongoing floating volatility patterns of Kinetics Market and Dow Jones.
Diversification Opportunities for Kinetics Market and Dow Jones
0.87 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Kinetics and Dow is 0.87. Overlapping area represents the amount of risk that can be diversified away by holding Kinetics Market Opportunities 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 Kinetics Market 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 Kinetics Market Opportunities 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 Kinetics Market i.e., Kinetics Market and Dow Jones go up and down completely randomly.
Pair Corralation between Kinetics Market and Dow Jones
Assuming the 90 days horizon Kinetics Market Opportunities is expected to generate 2.36 times more return on investment than Dow Jones. However, Kinetics Market is 2.36 times more volatile than Dow Jones Industrial. It trades about 0.73 of its potential returns per unit of risk. Dow Jones Industrial is currently generating about 0.26 per unit of risk. If you would invest 7,299 in Kinetics Market Opportunities on August 28, 2024 and sell it today you would earn a total of 3,064 from holding Kinetics Market Opportunities or generate 41.98% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Kinetics Market Opportunities vs. Dow Jones Industrial
Performance |
| Timeline |
Kinetics Market and Dow Jones Volatility Contrast
Predicted Return Density |
| Returns |
Kinetics Market Opportunities
Pair trading matchups for Kinetics Market
Dow Jones Industrial
Pair trading matchups for Dow Jones
Pair Trading with Kinetics Market and Dow Jones
The main advantage of trading using opposite Kinetics Market and Dow Jones positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Kinetics Market 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.| Kinetics Market vs. Kinetics Global Fund | Kinetics Market vs. Kinetics Global Fund | Kinetics Market vs. Kinetics Internet Fund | Kinetics Market vs. Kinetics Global Fund |
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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 Cryptocurrency Center module to build and monitor diversified portfolio of extremely risky digital assets and cryptocurrency.
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