Correlation Between KIMBALL ELECTRONICS and MGP Ingredients
Can any of the company-specific risk be diversified away by investing in both KIMBALL ELECTRONICS and MGP Ingredients 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 MGP Ingredients into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between KIMBALL ELECTRONICS and MGP Ingredients, you can compare the effects of market volatilities on KIMBALL ELECTRONICS and MGP Ingredients 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 MGP Ingredients. Check out your portfolio center. Please also check ongoing floating volatility patterns of KIMBALL ELECTRONICS and MGP Ingredients.
Diversification Opportunities for KIMBALL ELECTRONICS and MGP Ingredients
0.62 | Correlation Coefficient |
Poor diversification
The 3 months correlation between KIMBALL and MGP is 0.62. Overlapping area represents the amount of risk that can be diversified away by holding KIMBALL ELECTRONICS and MGP Ingredients in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on MGP Ingredients 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 MGP Ingredients. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of MGP Ingredients has no effect on the direction of KIMBALL ELECTRONICS i.e., KIMBALL ELECTRONICS and MGP Ingredients go up and down completely randomly.
Pair Corralation between KIMBALL ELECTRONICS and MGP Ingredients
Assuming the 90 days horizon KIMBALL ELECTRONICS is expected to generate 1.02 times more return on investment than MGP Ingredients. However, KIMBALL ELECTRONICS is 1.02 times more volatile than MGP Ingredients. It trades about -0.13 of its potential returns per unit of risk. MGP Ingredients is currently generating about -0.28 per unit of risk. If you would invest 1,830 in KIMBALL ELECTRONICS on November 27, 2024 and sell it today you would lose (110.00) from holding KIMBALL ELECTRONICS or give up 6.01% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 95.45% |
| Values | Daily Returns |
KIMBALL ELECTRONICS vs. MGP Ingredients
Performance |
| Timeline |
| KIMBALL ELECTRONICS |
| MGP Ingredients |
KIMBALL ELECTRONICS and MGP Ingredients Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with KIMBALL ELECTRONICS and MGP Ingredients
The main advantage of trading using opposite KIMBALL ELECTRONICS and MGP Ingredients positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if KIMBALL ELECTRONICS position performs unexpectedly, MGP Ingredients 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 MGP Ingredients will offset losses from the drop in MGP Ingredients' long position.| KIMBALL ELECTRONICS vs. Ultra Clean Holdings | KIMBALL ELECTRONICS vs. Carnegie Clean Energy | KIMBALL ELECTRONICS vs. MYFAIR GOLD P | KIMBALL ELECTRONICS vs. AUST AGRICULTURAL |
| MGP Ingredients vs. EIDESVIK OFFSHORE NK | MGP Ingredients vs. STORE ELECTRONIC | MGP Ingredients vs. WT OFFSHORE | MGP Ingredients vs. CENTURIA OFFICE REIT |
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 Equity Valuation module to check real value of public entities based on technical and fundamental data.
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