Correlation Between Dow Jones and KTAM Gold
Can any of the company-specific risk be diversified away by investing in both Dow Jones and KTAM Gold 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 Dow Jones and KTAM Gold into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Dow Jones Industrial and KTAM Gold ETF, you can compare the effects of market volatilities on Dow Jones and KTAM Gold 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 Dow Jones with a short position of KTAM Gold. Check out your portfolio center. Please also check ongoing floating volatility patterns of Dow Jones and KTAM Gold.
Diversification Opportunities for Dow Jones and KTAM Gold
Good diversification
The 3 months correlation between Dow and KTAM is -0.14. Overlapping area represents the amount of risk that can be diversified away by holding Dow Jones Industrial and KTAM Gold ETF in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on KTAM Gold ETF and Dow Jones 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 Dow Jones Industrial are associated (or correlated) with KTAM Gold. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of KTAM Gold ETF has no effect on the direction of Dow Jones i.e., Dow Jones and KTAM Gold go up and down completely randomly.
Pair Corralation between Dow Jones and KTAM Gold
Assuming the 90 days trading horizon Dow Jones Industrial is expected to under-perform the KTAM Gold. In addition to that, Dow Jones is 1.4 times more volatile than KTAM Gold ETF. It trades about -0.03 of its total potential returns per unit of risk. KTAM Gold ETF is currently generating about 0.34 per unit of volatility. If you would invest 362.00 in KTAM Gold ETF on December 26, 2024 and sell it today you would earn a total of 49.00 from holding KTAM Gold ETF or generate 13.54% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Against |
Strength | Insignificant |
Accuracy | 98.39% |
Values | Daily Returns |
Dow Jones Industrial vs. KTAM Gold ETF
Performance |
Timeline |
Dow Jones and KTAM Gold Volatility Contrast
Predicted Return Density |
Returns |
Dow Jones Industrial
Pair trading matchups for Dow Jones
KTAM Gold ETF
Pair trading matchups for KTAM Gold
Pair Trading with Dow Jones and KTAM Gold
The main advantage of trading using opposite Dow Jones and KTAM Gold positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Dow Jones position performs unexpectedly, KTAM Gold 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 KTAM Gold will offset losses from the drop in KTAM Gold's long position.Dow Jones vs. Bitfarms | Dow Jones vs. Univest Pennsylvania | Dow Jones vs. Broadstone Net Lease | Dow Jones vs. Exchange Bank |
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 Premium Stories module to follow Macroaxis premium stories from verified contributors across different equity types, categories and coverage scope.
Other Complementary Tools
My Watchlist Analysis Analyze my current watchlist and to refresh optimization strategy. Macroaxis watchlist is based on self-learning algorithm to remember stocks you like | |
Odds Of Bankruptcy Get analysis of equity chance of financial distress in the next 2 years | |
Portfolio Suggestion Get suggestions outside of your existing asset allocation including your own model portfolios | |
USA ETFs Find actively traded Exchange Traded Funds (ETF) in USA | |
Portfolio Optimization Compute new portfolio that will generate highest expected return given your specified tolerance for risk |