Correlation Between Corporate Travel and KENNAMETAL INC
Can any of the company-specific risk be diversified away by investing in both Corporate Travel and KENNAMETAL INC 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 Corporate Travel and KENNAMETAL INC into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Corporate Travel Management and KENNAMETAL INC, you can compare the effects of market volatilities on Corporate Travel and KENNAMETAL INC 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 Corporate Travel with a short position of KENNAMETAL INC. Check out your portfolio center. Please also check ongoing floating volatility patterns of Corporate Travel and KENNAMETAL INC.
Diversification Opportunities for Corporate Travel and KENNAMETAL INC
0.55 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Corporate and KENNAMETAL is 0.55. Overlapping area represents the amount of risk that can be diversified away by holding Corporate Travel Management and KENNAMETAL INC in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on KENNAMETAL INC and Corporate Travel 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 Corporate Travel Management are associated (or correlated) with KENNAMETAL INC. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of KENNAMETAL INC has no effect on the direction of Corporate Travel i.e., Corporate Travel and KENNAMETAL INC go up and down completely randomly.
Pair Corralation between Corporate Travel and KENNAMETAL INC
Assuming the 90 days trading horizon Corporate Travel is expected to generate 21.93 times less return on investment than KENNAMETAL INC. In addition to that, Corporate Travel is 1.43 times more volatile than KENNAMETAL INC. It trades about 0.0 of its total potential returns per unit of risk. KENNAMETAL INC is currently generating about 0.07 per unit of volatility. If you would invest 2,031 in KENNAMETAL INC on August 25, 2024 and sell it today you would earn a total of 709.00 from holding KENNAMETAL INC or generate 34.91% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 99.64% |
| Values | Daily Returns |
Corporate Travel Management vs. KENNAMETAL INC
Performance |
| Timeline |
| Corporate Travel Man |
| KENNAMETAL INC |
Corporate Travel and KENNAMETAL INC Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Corporate Travel and KENNAMETAL INC
The main advantage of trading using opposite Corporate Travel and KENNAMETAL INC positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Corporate Travel position performs unexpectedly, KENNAMETAL INC 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 KENNAMETAL INC will offset losses from the drop in KENNAMETAL INC's long position.| Corporate Travel vs. Apple Inc | Corporate Travel vs. Apple Inc | Corporate Travel vs. Apple Inc | Corporate Travel vs. Apple Inc |
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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 Global Markets Map module to get a quick overview of global market snapshot using zoomable world map. Drill down to check world indexes.
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