Correlation Between CDL INVESTMENT and KENNAMETAL INC
Can any of the company-specific risk be diversified away by investing in both CDL INVESTMENT 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 CDL INVESTMENT and KENNAMETAL INC into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between CDL INVESTMENT and KENNAMETAL INC, you can compare the effects of market volatilities on CDL INVESTMENT 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 CDL INVESTMENT with a short position of KENNAMETAL INC. Check out your portfolio center. Please also check ongoing floating volatility patterns of CDL INVESTMENT and KENNAMETAL INC.
Diversification Opportunities for CDL INVESTMENT and KENNAMETAL INC
-0.17 | Correlation Coefficient |
Good diversification
The 3 months correlation between CDL and KENNAMETAL is -0.17. Overlapping area represents the amount of risk that can be diversified away by holding CDL INVESTMENT and KENNAMETAL INC in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on KENNAMETAL INC and CDL INVESTMENT 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 CDL INVESTMENT 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 CDL INVESTMENT i.e., CDL INVESTMENT and KENNAMETAL INC go up and down completely randomly.
Pair Corralation between CDL INVESTMENT and KENNAMETAL INC
Assuming the 90 days trading horizon CDL INVESTMENT is expected to generate 1.76 times less return on investment than KENNAMETAL INC. In addition to that, CDL INVESTMENT is 1.19 times more volatile than KENNAMETAL INC. It trades about 0.03 of its total potential returns per unit of risk. KENNAMETAL INC is currently generating about 0.07 per unit of volatility. If you would invest 2,031 in KENNAMETAL INC on August 25, 2024 and sell it today you would earn a total of 709.00 from holding KENNAMETAL INC or generate 34.91% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
CDL INVESTMENT vs. KENNAMETAL INC
Performance |
| Timeline |
| CDL INVESTMENT |
| KENNAMETAL INC |
CDL INVESTMENT and KENNAMETAL INC Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with CDL INVESTMENT and KENNAMETAL INC
The main advantage of trading using opposite CDL INVESTMENT and KENNAMETAL INC positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if CDL INVESTMENT 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.| CDL INVESTMENT vs. United Natural Foods | CDL INVESTMENT vs. Jacquet Metal Service | CDL INVESTMENT vs. SIMS METAL MGT | CDL INVESTMENT vs. Tyson Foods |
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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 Headlines Timeline module to stay connected to all market stories and filter out noise. Drill down to analyze hype elasticity.
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