Correlation Between Koppers Holdings and Dow Jones
Can any of the company-specific risk be diversified away by investing in both Koppers Holdings 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 Koppers Holdings and Dow Jones into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Koppers Holdings and Dow Jones Industrial, you can compare the effects of market volatilities on Koppers Holdings 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 Koppers Holdings with a short position of Dow Jones. Check out your portfolio center. Please also check ongoing floating volatility patterns of Koppers Holdings and Dow Jones.
Diversification Opportunities for Koppers Holdings and Dow Jones
0.29 | Correlation Coefficient |
Modest diversification
The 3 months correlation between Koppers and Dow is 0.29. Overlapping area represents the amount of risk that can be diversified away by holding Koppers Holdings 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 Koppers Holdings 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 Koppers Holdings 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 Koppers Holdings i.e., Koppers Holdings and Dow Jones go up and down completely randomly.
Pair Corralation between Koppers Holdings and Dow Jones
Considering the 90-day investment horizon Koppers Holdings is expected to generate 8.52 times less return on investment than Dow Jones. In addition to that, Koppers Holdings is 2.98 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 0.19 per unit of volatility. If you would invest 4,093,693 in Dow Jones Industrial on August 31, 2024 and sell it today you would earn a total of 378,513 from holding Dow Jones Industrial or generate 9.25% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Koppers Holdings vs. Dow Jones Industrial
Performance |
| Timeline |
Koppers Holdings and Dow Jones Volatility Contrast
Predicted Return Density |
| Returns |
Koppers Holdings
Pair trading matchups for Koppers Holdings
Dow Jones Industrial
Pair trading matchups for Dow Jones
Pair Trading with Koppers Holdings and Dow Jones
The main advantage of trading using opposite Koppers Holdings and Dow Jones positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Koppers Holdings 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.| Koppers Holdings vs. H B Fuller | Koppers Holdings vs. Minerals Technologies | Koppers Holdings vs. Quaker Chemical | Koppers Holdings vs. Oil Dri |
| Dow Jones vs. Aerofoam Metals | Dow Jones vs. ACG Metals Limited | Dow Jones vs. China Clean Energy | Dow Jones vs. Fast Retailing Co |
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 Watchlist Optimization module to optimize watchlists to build efficient portfolios or rebalance existing positions based on the mean-variance optimization algorithm.
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