Correlation Between Spirent Communications and KIMBALL ELECTRONICS
Can any of the company-specific risk be diversified away by investing in both Spirent Communications 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 Spirent Communications and KIMBALL ELECTRONICS into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Spirent Communications plc and KIMBALL ELECTRONICS, you can compare the effects of market volatilities on Spirent Communications 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 Spirent Communications with a short position of KIMBALL ELECTRONICS. Check out your portfolio center. Please also check ongoing floating volatility patterns of Spirent Communications and KIMBALL ELECTRONICS.
Diversification Opportunities for Spirent Communications and KIMBALL ELECTRONICS
0.26 | Correlation Coefficient |
Modest diversification
The 3 months correlation between Spirent and KIMBALL is 0.26. Overlapping area represents the amount of risk that can be diversified away by holding Spirent Communications plc and KIMBALL ELECTRONICS in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on KIMBALL ELECTRONICS and Spirent Communications 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 Spirent Communications 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 Spirent Communications i.e., Spirent Communications and KIMBALL ELECTRONICS go up and down completely randomly.
Pair Corralation between Spirent Communications and KIMBALL ELECTRONICS
Assuming the 90 days horizon Spirent Communications plc is expected to generate 0.59 times more return on investment than KIMBALL ELECTRONICS. However, Spirent Communications plc is 1.71 times less risky than KIMBALL ELECTRONICS. It trades about 0.0 of its potential returns per unit of risk. KIMBALL ELECTRONICS is currently generating about -0.02 per unit of risk. If you would invest 216.00 in Spirent Communications plc on October 13, 2024 and sell it today you would lose (4.00) from holding Spirent Communications plc or give up 1.85% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Spirent Communications plc vs. KIMBALL ELECTRONICS
Performance |
| Timeline |
| Spirent Communications |
| KIMBALL ELECTRONICS |
Spirent Communications and KIMBALL ELECTRONICS Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Spirent Communications and KIMBALL ELECTRONICS
The main advantage of trading using opposite Spirent Communications and KIMBALL ELECTRONICS positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Spirent Communications 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.| Spirent Communications vs. MEDICAL FACILITIES NEW | Spirent Communications vs. GLOBUS MEDICAL A | Spirent Communications vs. Eidesvik Offshore ASA | Spirent Communications vs. MeVis Medical Solutions |
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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 Stocks Directory module to find actively traded stocks across global markets.
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