Correlation Between Kenvue and Dow Jones
Can any of the company-specific risk be diversified away by investing in both Kenvue 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 Kenvue and Dow Jones into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Kenvue Inc and Dow Jones Industrial, you can compare the effects of market volatilities on Kenvue 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 Kenvue with a short position of Dow Jones. Check out your portfolio center. Please also check ongoing floating volatility patterns of Kenvue and Dow Jones.
Diversification Opportunities for Kenvue and Dow Jones
Weak diversification
The 3 months correlation between Kenvue and Dow is 0.34. Overlapping area represents the amount of risk that can be diversified away by holding Kenvue Inc 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 Kenvue 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 Kenvue Inc 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 Kenvue i.e., Kenvue and Dow Jones go up and down completely randomly.
Pair Corralation between Kenvue and Dow Jones
Given the investment horizon of 90 days Kenvue Inc is expected to generate 1.38 times more return on investment than Dow Jones. However, Kenvue is 1.38 times more volatile than Dow Jones Industrial. It trades about 0.23 of its potential returns per unit of risk. Dow Jones Industrial is currently generating about 0.19 per unit of risk. If you would invest 2,256 in Kenvue Inc on August 24, 2024 and sell it today you would earn a total of 161.50 from holding Kenvue Inc or generate 7.16% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Kenvue Inc vs. Dow Jones Industrial
Performance |
| Timeline |
Kenvue and Dow Jones Volatility Contrast
Predicted Return Density |
| Returns |
Kenvue Inc
Pair trading matchups for Kenvue
Dow Jones Industrial
Pair trading matchups for Dow Jones
Pair Trading with Kenvue and Dow Jones
The main advantage of trading using opposite Kenvue and Dow Jones positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Kenvue 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.| Kenvue vs. Eshallgo Class A | Kenvue vs. Amtech Systems | Kenvue vs. Gold Fields Ltd | Kenvue vs. Aegean Airlines SA |
| 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 Portfolio Diagnostics module to use generated alerts and portfolio events aggregator to diagnose current holdings.
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