Correlation Between SWISS WATER and KENNAMETAL INC
Can any of the company-specific risk be diversified away by investing in both SWISS WATER 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 SWISS WATER and KENNAMETAL INC into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between SWISS WATER DECAFFCOFFEE and KENNAMETAL INC, you can compare the effects of market volatilities on SWISS WATER 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 SWISS WATER with a short position of KENNAMETAL INC. Check out your portfolio center. Please also check ongoing floating volatility patterns of SWISS WATER and KENNAMETAL INC.
Diversification Opportunities for SWISS WATER and KENNAMETAL INC
0.73 | Correlation Coefficient |
Poor diversification
The 3 months correlation between SWISS and KENNAMETAL is 0.73. Overlapping area represents the amount of risk that can be diversified away by holding SWISS WATER DECAFFCOFFEE and KENNAMETAL INC in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on KENNAMETAL INC and SWISS WATER 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 SWISS WATER DECAFFCOFFEE 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 SWISS WATER i.e., SWISS WATER and KENNAMETAL INC go up and down completely randomly.
Pair Corralation between SWISS WATER and KENNAMETAL INC
Assuming the 90 days horizon SWISS WATER DECAFFCOFFEE is expected to generate 1.41 times more return on investment than KENNAMETAL INC. However, SWISS WATER is 1.41 times more volatile than KENNAMETAL INC. It trades about -0.04 of its potential returns per unit of risk. KENNAMETAL INC is currently generating about -0.22 per unit of risk. If you would invest 270.00 in SWISS WATER DECAFFCOFFEE on September 15, 2024 and sell it today you would lose (6.00) from holding SWISS WATER DECAFFCOFFEE or give up 2.22% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
SWISS WATER DECAFFCOFFEE vs. KENNAMETAL INC
Performance |
| Timeline |
| SWISS WATER DECAFFCOFFEE |
| KENNAMETAL INC |
SWISS WATER and KENNAMETAL INC Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with SWISS WATER and KENNAMETAL INC
The main advantage of trading using opposite SWISS WATER and KENNAMETAL INC positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if SWISS WATER 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.| SWISS WATER vs. Hormel Foods | SWISS WATER vs. Superior Plus Corp | SWISS WATER vs. SIVERS SEMICONDUCTORS AB | SWISS WATER vs. NorAm Drilling AS |
| KENNAMETAL INC vs. Seven West Media | KENNAMETAL INC vs. PARKEN Sport Entertainment | KENNAMETAL INC vs. SWISS WATER DECAFFCOFFEE | KENNAMETAL INC vs. PLAYSTUDIOS A DL 0001 |
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 Money Managers module to screen money managers from public funds and ETFs managed around the world.
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