Correlation Between KAUFMAN ET and Archer Daniels
Can any of the company-specific risk be diversified away by investing in both KAUFMAN ET and Archer Daniels 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 KAUFMAN ET and Archer Daniels into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between KAUFMAN ET BROAD and Archer Daniels Midland, you can compare the effects of market volatilities on KAUFMAN ET and Archer Daniels 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 KAUFMAN ET with a short position of Archer Daniels. Check out your portfolio center. Please also check ongoing floating volatility patterns of KAUFMAN ET and Archer Daniels.
Diversification Opportunities for KAUFMAN ET and Archer Daniels
-0.4 | Correlation Coefficient |
Very good diversification
The 3 months correlation between KAUFMAN and Archer is -0.4. Overlapping area represents the amount of risk that can be diversified away by holding KAUFMAN ET BROAD and Archer Daniels Midland in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Archer Daniels Midland and KAUFMAN ET 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 KAUFMAN ET BROAD are associated (or correlated) with Archer Daniels. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Archer Daniels Midland has no effect on the direction of KAUFMAN ET i.e., KAUFMAN ET and Archer Daniels go up and down completely randomly.
Pair Corralation between KAUFMAN ET and Archer Daniels
Assuming the 90 days trading horizon KAUFMAN ET BROAD is expected to generate 0.89 times more return on investment than Archer Daniels. However, KAUFMAN ET BROAD is 1.13 times less risky than Archer Daniels. It trades about 0.03 of its potential returns per unit of risk. Archer Daniels Midland is currently generating about -0.03 per unit of risk. If you would invest 2,714 in KAUFMAN ET BROAD on September 4, 2024 and sell it today you would earn a total of 286.00 from holding KAUFMAN ET BROAD or generate 10.54% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
KAUFMAN ET BROAD vs. Archer Daniels Midland
Performance |
| Timeline |
| KAUFMAN ET BROAD |
| Archer Daniels Midland |
KAUFMAN ET and Archer Daniels Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with KAUFMAN ET and Archer Daniels
The main advantage of trading using opposite KAUFMAN ET and Archer Daniels positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if KAUFMAN ET position performs unexpectedly, Archer Daniels 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 Archer Daniels will offset losses from the drop in Archer Daniels' long position.| KAUFMAN ET vs. MeVis Medical Solutions | KAUFMAN ET vs. MEDICAL FACILITIES NEW | KAUFMAN ET vs. Media and Games | KAUFMAN ET vs. Penn National Gaming |
| Archer Daniels vs. KAUFMAN ET BROAD | Archer Daniels vs. Air Transport Services | Archer Daniels vs. Broadcom | Archer Daniels vs. MGIC INVESTMENT |
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 Analyzer module to portfolio analysis module that provides access to portfolio diagnostics and optimization engine.
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