Correlation Between Knorr Bremse and Dow Jones
Can any of the company-specific risk be diversified away by investing in both Knorr Bremse 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 Knorr Bremse and Dow Jones into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Knorr Bremse Aktiengesellschaft and Dow Jones Industrial, you can compare the effects of market volatilities on Knorr Bremse 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 Knorr Bremse with a short position of Dow Jones. Check out your portfolio center. Please also check ongoing floating volatility patterns of Knorr Bremse and Dow Jones.
Diversification Opportunities for Knorr Bremse and Dow Jones
-0.64 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Knorr and Dow is -0.64. Overlapping area represents the amount of risk that can be diversified away by holding Knorr Bremse Aktiengesellschaf 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 Knorr Bremse 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 Knorr Bremse Aktiengesellschaft 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 Knorr Bremse i.e., Knorr Bremse and Dow Jones go up and down completely randomly.
Pair Corralation between Knorr Bremse and Dow Jones
Assuming the 90 days horizon Knorr Bremse is expected to generate 1.48 times less return on investment than Dow Jones. In addition to that, Knorr Bremse is 2.41 times more volatile than Dow Jones Industrial. It trades about 0.03 of its total potential returns per unit of risk. Dow Jones Industrial is currently generating about 0.1 per unit of volatility. If you would invest 3,522,518 in Dow Jones Industrial on September 12, 2024 and sell it today you would earn a total of 902,265 from holding Dow Jones Industrial or generate 25.61% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Knorr Bremse Aktiengesellschaf vs. Dow Jones Industrial
Performance |
| Timeline |
Knorr Bremse and Dow Jones Volatility Contrast
Predicted Return Density |
| Returns |
Knorr Bremse Aktiengesellschaft
Pair trading matchups for Knorr Bremse
Dow Jones Industrial
Pair trading matchups for Dow Jones
Pair Trading with Knorr Bremse and Dow Jones
The main advantage of trading using opposite Knorr Bremse and Dow Jones positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Knorr Bremse 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.| Knorr Bremse vs. 4 Less Group | Knorr Bremse vs. Foresight Autonomous Holdings | Knorr Bremse vs. Goodyear Tire Rubber | Knorr Bremse vs. Luminar Technologies |
| Dow Jones vs. Aeye Inc | Dow Jones vs. Gentex | Dow Jones vs. Marine Products | Dow Jones vs. CarsalesCom Ltd ADR |
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 Financial Widgets module to easily integrated Macroaxis content with over 30 different plug-and-play financial widgets.
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