Correlation Between KWG Resources and Dow Jones
Can any of the company-specific risk be diversified away by investing in both KWG Resources 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 KWG Resources and Dow Jones into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between KWG Resources and Dow Jones Industrial, you can compare the effects of market volatilities on KWG Resources 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 KWG Resources with a short position of Dow Jones. Check out your portfolio center. Please also check ongoing floating volatility patterns of KWG Resources and Dow Jones.
Diversification Opportunities for KWG Resources and Dow Jones
-0.21 | Correlation Coefficient |
Very good diversification
The 3 months correlation between KWG and Dow is -0.21. Overlapping area represents the amount of risk that can be diversified away by holding KWG Resources 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 KWG Resources 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 KWG Resources 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 KWG Resources i.e., KWG Resources and Dow Jones go up and down completely randomly.
Pair Corralation between KWG Resources and Dow Jones
Assuming the 90 days horizon KWG Resources is expected to generate 23.57 times more return on investment than Dow Jones. However, KWG Resources is 23.57 times more volatile than Dow Jones Industrial. It trades about 0.04 of its potential returns per unit of risk. Dow Jones Industrial is currently generating about 0.1 per unit of risk. If you would invest 2.00 in KWG Resources on August 25, 2024 and sell it today you would lose (1.30) from holding KWG Resources or give up 65.0% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
KWG Resources vs. Dow Jones Industrial
Performance |
| Timeline |
KWG Resources and Dow Jones Volatility Contrast
Predicted Return Density |
| Returns |
KWG Resources
Pair trading matchups for KWG Resources
Dow Jones Industrial
Pair trading matchups for Dow Jones
Pair Trading with KWG Resources and Dow Jones
The main advantage of trading using opposite KWG Resources and Dow Jones positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if KWG Resources 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.| KWG Resources vs. Metals X Limited | KWG Resources vs. Largo Resources | KWG Resources vs. Sigma Lithium Resources | KWG Resources vs. Horizon Minerals Corp |
| Dow Jones vs. Vistra Energy Corp | Dow Jones vs. Fluence Energy | Dow Jones vs. Old Republic International | Dow Jones vs. Empresa Distribuidora y |
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 Idea Optimizer module to use advanced portfolio builder with pre-computed micro ideas to build optimal portfolio .
Other Complementary Tools
| Options Analysis Analyze and evaluate options and option chains as a potential hedge for your portfolios | |
| Portfolio Diagnostics Use generated alerts and portfolio events aggregator to diagnose current holdings | |
| Alpha Finder Use alpha and beta coefficients to find investment opportunities after accounting for the risk | |
| Portfolio Holdings Check your current holdings and cash postion to detemine if your portfolio needs rebalancing | |
| Pair Correlation Compare performance and examine fundamental relationship between any two equity instruments |