Correlation Between COUSINS PTIES and KENNAMETAL INC
Can any of the company-specific risk be diversified away by investing in both COUSINS PTIES 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 COUSINS PTIES and KENNAMETAL INC into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between COUSINS PTIES INC and KENNAMETAL INC, you can compare the effects of market volatilities on COUSINS PTIES 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 COUSINS PTIES with a short position of KENNAMETAL INC. Check out your portfolio center. Please also check ongoing floating volatility patterns of COUSINS PTIES and KENNAMETAL INC.
Diversification Opportunities for COUSINS PTIES and KENNAMETAL INC
0.8 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between COUSINS and KENNAMETAL is 0.8. Overlapping area represents the amount of risk that can be diversified away by holding COUSINS PTIES INC and KENNAMETAL INC in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on KENNAMETAL INC and COUSINS PTIES 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 COUSINS PTIES INC 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 COUSINS PTIES i.e., COUSINS PTIES and KENNAMETAL INC go up and down completely randomly.
Pair Corralation between COUSINS PTIES and KENNAMETAL INC
Assuming the 90 days trading horizon COUSINS PTIES INC is expected to generate 0.81 times more return on investment than KENNAMETAL INC. However, COUSINS PTIES INC is 1.23 times less risky than KENNAMETAL INC. It trades about 0.11 of its potential returns per unit of risk. KENNAMETAL INC is currently generating about 0.06 per unit of risk. If you would invest 1,965 in COUSINS PTIES INC on September 4, 2024 and sell it today you would earn a total of 955.00 from holding COUSINS PTIES INC or generate 48.6% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
COUSINS PTIES INC vs. KENNAMETAL INC
Performance |
| Timeline |
| COUSINS PTIES INC |
| KENNAMETAL INC |
COUSINS PTIES and KENNAMETAL INC Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with COUSINS PTIES and KENNAMETAL INC
The main advantage of trading using opposite COUSINS PTIES and KENNAMETAL INC positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if COUSINS PTIES 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.| COUSINS PTIES vs. KENNAMETAL INC | COUSINS PTIES vs. Public Storage | COUSINS PTIES vs. Jacquet Metal Service | COUSINS PTIES vs. Fidelity National Information |
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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 Commodity Directory module to find actively traded commodities issued by global exchanges.
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