Correlation Between Dow Jones and Keeley Small
Can any of the company-specific risk be diversified away by investing in both Dow Jones and Keeley Small 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 Keeley Small 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 Keeley Small Cap, you can compare the effects of market volatilities on Dow Jones and Keeley Small 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 Keeley Small. Check out your portfolio center. Please also check ongoing floating volatility patterns of Dow Jones and Keeley Small.
Diversification Opportunities for Dow Jones and Keeley Small
0.83 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Dow and Keeley is 0.83. Overlapping area represents the amount of risk that can be diversified away by holding Dow Jones Industrial and Keeley Small Cap in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Keeley Small Cap 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 Keeley Small. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Keeley Small Cap has no effect on the direction of Dow Jones i.e., Dow Jones and Keeley Small go up and down completely randomly.
Pair Corralation between Dow Jones and Keeley Small
Assuming the 90 days trading horizon Dow Jones is expected to generate 1.14 times less return on investment than Keeley Small. But when comparing it to its historical volatility, Dow Jones Industrial is 1.49 times less risky than Keeley Small. It trades about 0.09 of its potential returns per unit of risk. Keeley Small Cap is currently generating about 0.07 of returns per unit of risk over similar time horizon. If you would invest 1,658 in Keeley Small Cap on July 5, 2024 and sell it today you would earn a total of 146.00 from holding Keeley Small Cap or generate 8.81% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Together |
Strength | Strong |
Accuracy | 100.0% |
Values | Daily Returns |
Dow Jones Industrial vs. Keeley Small Cap
Performance |
Timeline |
Dow Jones and Keeley Small Volatility Contrast
Predicted Return Density |
Returns |
Dow Jones Industrial
Pair trading matchups for Dow Jones
Keeley Small Cap
Pair trading matchups for Keeley Small
Pair Trading with Dow Jones and Keeley Small
The main advantage of trading using opposite Dow Jones and Keeley Small positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Dow Jones position performs unexpectedly, Keeley Small 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 Keeley Small will offset losses from the drop in Keeley Small's long position.Dow Jones vs. PepsiCo | Dow Jones vs. Analog Devices | Dow Jones vs. Skyworks Solutions | Dow Jones vs. The Coca Cola |
Keeley Small vs. Lord Abbett Inflation | Keeley Small vs. Simt Multi Asset Inflation | Keeley Small vs. Ab Bond Inflation | Keeley Small vs. Blackrock Inflation Protected |
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 Bonds Directory module to find actively traded corporate debentures issued by US companies.
Other Complementary Tools
Balance Of Power Check stock momentum by analyzing Balance Of Power indicator and other technical ratios | |
Analyst Advice Analyst recommendations and target price estimates broken down by several categories | |
ETF Categories List of ETF categories grouped based on various criteria, such as the investment strategy or type of investments | |
Earnings Calls Check upcoming earnings announcements updated hourly across public exchanges | |
Performance Analysis Check effects of mean-variance optimization against your current asset allocation |