Correlation Between KIMBALL ELECTRONICS and Iridium Communications
Can any of the company-specific risk be diversified away by investing in both KIMBALL ELECTRONICS and Iridium Communications 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 KIMBALL ELECTRONICS and Iridium Communications into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between KIMBALL ELECTRONICS and Iridium Communications, you can compare the effects of market volatilities on KIMBALL ELECTRONICS and Iridium Communications 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 KIMBALL ELECTRONICS with a short position of Iridium Communications. Check out your portfolio center. Please also check ongoing floating volatility patterns of KIMBALL ELECTRONICS and Iridium Communications.
Diversification Opportunities for KIMBALL ELECTRONICS and Iridium Communications
0.3 | Correlation Coefficient |
Weak diversification
The 3 months correlation between KIMBALL and Iridium is 0.3. Overlapping area represents the amount of risk that can be diversified away by holding KIMBALL ELECTRONICS and Iridium Communications in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Iridium Communications and KIMBALL ELECTRONICS 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 KIMBALL ELECTRONICS are associated (or correlated) with Iridium Communications. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Iridium Communications has no effect on the direction of KIMBALL ELECTRONICS i.e., KIMBALL ELECTRONICS and Iridium Communications go up and down completely randomly.
Pair Corralation between KIMBALL ELECTRONICS and Iridium Communications
Assuming the 90 days horizon KIMBALL ELECTRONICS is expected to under-perform the Iridium Communications. But the stock apears to be less risky and, when comparing its historical volatility, KIMBALL ELECTRONICS is 1.05 times less risky than Iridium Communications. The stock trades about -0.02 of its potential returns per unit of risk. The Iridium Communications is currently generating about 0.05 of returns per unit of risk over similar time horizon. If you would invest 2,438 in Iridium Communications on October 13, 2024 and sell it today you would earn a total of 433.00 from holding Iridium Communications or generate 17.76% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
KIMBALL ELECTRONICS vs. Iridium Communications
Performance |
| Timeline |
| KIMBALL ELECTRONICS |
| Iridium Communications |
KIMBALL ELECTRONICS and Iridium Communications Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with KIMBALL ELECTRONICS and Iridium Communications
The main advantage of trading using opposite KIMBALL ELECTRONICS and Iridium Communications positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if KIMBALL ELECTRONICS position performs unexpectedly, Iridium Communications 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 Iridium Communications will offset losses from the drop in Iridium Communications' long position.| KIMBALL ELECTRONICS vs. Ryanair Holdings plc | KIMBALL ELECTRONICS vs. MAGIC SOFTWARE ENTR | KIMBALL ELECTRONICS vs. OPERA SOFTWARE | KIMBALL ELECTRONICS vs. Alaska Air Group |
| Iridium Communications vs. Columbia Sportswear | Iridium Communications vs. Peijia Medical Limited | Iridium Communications vs. CVR Medical Corp | Iridium Communications vs. ARISTOCRAT LEISURE |
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.
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