Correlation Between TT Electronics and KIMBALL ELECTRONICS
Can any of the company-specific risk be diversified away by investing in both TT Electronics 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 TT Electronics and KIMBALL ELECTRONICS into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between TT Electronics PLC and KIMBALL ELECTRONICS, you can compare the effects of market volatilities on TT Electronics 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 TT Electronics with a short position of KIMBALL ELECTRONICS. Check out your portfolio center. Please also check ongoing floating volatility patterns of TT Electronics and KIMBALL ELECTRONICS.
Diversification Opportunities for TT Electronics and KIMBALL ELECTRONICS
0.28 | Correlation Coefficient |
Modest diversification
The 3 months correlation between 7TT and KIMBALL is 0.28. Overlapping area represents the amount of risk that can be diversified away by holding TT Electronics PLC and KIMBALL ELECTRONICS in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on KIMBALL ELECTRONICS and TT 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 TT Electronics PLC 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 TT Electronics i.e., TT Electronics and KIMBALL ELECTRONICS go up and down completely randomly.
Pair Corralation between TT Electronics and KIMBALL ELECTRONICS
Assuming the 90 days trading horizon TT Electronics PLC is expected to under-perform the KIMBALL ELECTRONICS. In addition to that, TT Electronics is 1.71 times more volatile than KIMBALL ELECTRONICS. It trades about -0.04 of its total potential returns per unit of risk. KIMBALL ELECTRONICS is currently generating about -0.05 per unit of volatility. If you would invest 2,140 in KIMBALL ELECTRONICS on September 21, 2024 and sell it today you would lose (390.00) from holding KIMBALL ELECTRONICS or give up 18.22% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
TT Electronics PLC vs. KIMBALL ELECTRONICS
Performance |
| Timeline |
| TT Electronics PLC |
| KIMBALL ELECTRONICS |
TT Electronics and KIMBALL ELECTRONICS Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with TT Electronics and KIMBALL ELECTRONICS
The main advantage of trading using opposite TT Electronics and KIMBALL ELECTRONICS positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if TT Electronics 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.| TT Electronics vs. Apple Inc | TT Electronics vs. Apple Inc | TT Electronics vs. Apple Inc | TT Electronics vs. Apple Inc |
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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 Balance Of Power module to check stock momentum by analyzing Balance Of Power indicator and other technical ratios.
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