Correlation Between Summit Materials and KIMBALL ELECTRONICS
Can any of the company-specific risk be diversified away by investing in both Summit Materials and KIMBALL ELECTRONICS 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 Summit Materials and KIMBALL ELECTRONICS into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Summit Materials and KIMBALL ELECTRONICS, you can compare the effects of market volatilities on Summit Materials and KIMBALL ELECTRONICS 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 Summit Materials with a short position of KIMBALL ELECTRONICS. Check out your portfolio center. Please also check ongoing floating volatility patterns of Summit Materials and KIMBALL ELECTRONICS.
Diversification Opportunities for Summit Materials and KIMBALL ELECTRONICS
0.89 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Summit and KIMBALL is 0.89. Overlapping area represents the amount of risk that can be diversified away by holding Summit Materials and KIMBALL ELECTRONICS in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on KIMBALL ELECTRONICS and Summit Materials 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 Summit Materials are associated (or correlated) with KIMBALL ELECTRONICS. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of KIMBALL ELECTRONICS has no effect on the direction of Summit Materials i.e., Summit Materials and KIMBALL ELECTRONICS go up and down completely randomly.
Pair Corralation between Summit Materials and KIMBALL ELECTRONICS
Assuming the 90 days trading horizon Summit Materials is expected to generate 0.89 times more return on investment than KIMBALL ELECTRONICS. However, Summit Materials is 1.13 times less risky than KIMBALL ELECTRONICS. It trades about 0.08 of its potential returns per unit of risk. KIMBALL ELECTRONICS is currently generating about -0.02 per unit of risk. If you would invest 3,360 in Summit Materials on September 3, 2024 and sell it today you would earn a total of 1,480 from holding Summit Materials or generate 44.05% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Summit Materials vs. KIMBALL ELECTRONICS
Performance |
| Timeline |
| Summit Materials |
| KIMBALL ELECTRONICS |
Summit Materials and KIMBALL ELECTRONICS Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Summit Materials and KIMBALL ELECTRONICS
The main advantage of trading using opposite Summit Materials and KIMBALL ELECTRONICS positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Summit Materials position performs unexpectedly, KIMBALL ELECTRONICS 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 KIMBALL ELECTRONICS will offset losses from the drop in KIMBALL ELECTRONICS's long position.| Summit Materials vs. KIMBALL ELECTRONICS | Summit Materials vs. AOI Electronics Co | Summit Materials vs. LION ONE METALS | Summit Materials vs. Perseus Mining Limited |
| KIMBALL ELECTRONICS vs. Delta Electronics Public | KIMBALL ELECTRONICS vs. YASKAWA ELEC UNSP | KIMBALL ELECTRONICS vs. VERTIV HOLCL A | KIMBALL ELECTRONICS vs. Varta AG |
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 Transaction History module to view history of all your transactions and understand their impact on performance.
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