Correlation Between KIMBALL ELECTRONICS and WILLIS LEASE
Can any of the company-specific risk be diversified away by investing in both KIMBALL ELECTRONICS and WILLIS LEASE 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 WILLIS LEASE into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between KIMBALL ELECTRONICS and WILLIS LEASE FIN, you can compare the effects of market volatilities on KIMBALL ELECTRONICS and WILLIS LEASE 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 WILLIS LEASE. Check out your portfolio center. Please also check ongoing floating volatility patterns of KIMBALL ELECTRONICS and WILLIS LEASE.
Diversification Opportunities for KIMBALL ELECTRONICS and WILLIS LEASE
0.11 | Correlation Coefficient |
Average diversification
The 3 months correlation between KIMBALL and WILLIS is 0.11. Overlapping area represents the amount of risk that can be diversified away by holding KIMBALL ELECTRONICS and WILLIS LEASE FIN in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on WILLIS LEASE FIN 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 WILLIS LEASE. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of WILLIS LEASE FIN has no effect on the direction of KIMBALL ELECTRONICS i.e., KIMBALL ELECTRONICS and WILLIS LEASE go up and down completely randomly.
Pair Corralation between KIMBALL ELECTRONICS and WILLIS LEASE
Assuming the 90 days horizon KIMBALL ELECTRONICS is expected to under-perform the WILLIS LEASE. But the stock apears to be less risky and, when comparing its historical volatility, KIMBALL ELECTRONICS is 1.26 times less risky than WILLIS LEASE. The stock trades about -0.02 of its potential returns per unit of risk. The WILLIS LEASE FIN is currently generating about 0.1 of returns per unit of risk over similar time horizon. If you would invest 5,143 in WILLIS LEASE FIN on November 5, 2024 and sell it today you would earn a total of 13,157 from holding WILLIS LEASE FIN or generate 255.82% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
KIMBALL ELECTRONICS vs. WILLIS LEASE FIN
Performance |
| Timeline |
| KIMBALL ELECTRONICS |
| WILLIS LEASE FIN |
KIMBALL ELECTRONICS and WILLIS LEASE Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with KIMBALL ELECTRONICS and WILLIS LEASE
The main advantage of trading using opposite KIMBALL ELECTRONICS and WILLIS LEASE positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if KIMBALL ELECTRONICS position performs unexpectedly, WILLIS LEASE 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 WILLIS LEASE will offset losses from the drop in WILLIS LEASE's long position.| KIMBALL ELECTRONICS vs. EVS Broadcast Equipment | KIMBALL ELECTRONICS vs. Nishi Nippon Railroad Co | KIMBALL ELECTRONICS vs. Air Transport Services | KIMBALL ELECTRONICS vs. Texas Roadhouse |
| WILLIS LEASE vs. UNITED UTILITIES GR | WILLIS LEASE vs. REINET INVESTMENTS SCA | WILLIS LEASE vs. Haverty Furniture Companies | WILLIS LEASE vs. CHRYSALIS INVESTMENTS LTD |
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 Portfolio Rebalancing module to analyze risk-adjusted returns against different time horizons to find asset-allocation targets.
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