Correlation Between Key Tronic and Dow Jones
Can any of the company-specific risk be diversified away by investing in both Key Tronic 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 Key Tronic and Dow Jones into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Key Tronic and Dow Jones Industrial, you can compare the effects of market volatilities on Key Tronic 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 Key Tronic with a short position of Dow Jones. Check out your portfolio center. Please also check ongoing floating volatility patterns of Key Tronic and Dow Jones.
Diversification Opportunities for Key Tronic and Dow Jones
0.77 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Key and Dow is 0.77. Overlapping area represents the amount of risk that can be diversified away by holding Key Tronic 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 Key Tronic 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 Tronic 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 Key Tronic i.e., Key Tronic and Dow Jones go up and down completely randomly.
Pair Corralation between Key Tronic and Dow Jones
Given the investment horizon of 90 days Key Tronic is expected to under-perform the Dow Jones. In addition to that, Key Tronic is 1.96 times more volatile than Dow Jones Industrial. It trades about -0.11 of its total potential returns per unit of risk. Dow Jones Industrial is currently generating about 0.15 per unit of volatility. If you would invest 4,251,495 in Dow Jones Industrial on August 24, 2024 and sell it today you would earn a total of 135,540 from holding Dow Jones Industrial or generate 3.19% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Key Tronic vs. Dow Jones Industrial
Performance |
| Timeline |
Key Tronic and Dow Jones Volatility Contrast
Predicted Return Density |
| Returns |
Key Tronic
Pair trading matchups for Key Tronic
Dow Jones Industrial
Pair trading matchups for Dow Jones
Pair Trading with Key Tronic and Dow Jones
The main advantage of trading using opposite Key Tronic and Dow Jones positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Key Tronic 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.| Key Tronic vs. AGM Group Holdings | Key Tronic vs. TransAct Technologies Incorporated | Key Tronic vs. AstroNova | Key Tronic vs. Quantum |
| Dow Jones vs. Sphere Entertainment Co | Dow Jones vs. Perseus Mining Limited | Dow Jones vs. Titan Machinery | Dow Jones vs. Simon Property Group |
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 Commodity Channel module to use Commodity Channel Index to analyze current equity momentum.
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