Correlation Between Graham and Kadant
Can any of the company-specific risk be diversified away by investing in both Graham and Kadant 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 Graham and Kadant into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Graham and Kadant Inc, you can compare the effects of market volatilities on Graham and Kadant 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 Graham with a short position of Kadant. Check out your portfolio center. Please also check ongoing floating volatility patterns of Graham and Kadant.
Diversification Opportunities for Graham and Kadant
Very poor diversification
The 3 months correlation between Graham and Kadant is 0.86. Overlapping area represents the amount of risk that can be diversified away by holding Graham and Kadant Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Kadant Inc and Graham 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 Graham are associated (or correlated) with Kadant. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Kadant Inc has no effect on the direction of Graham i.e., Graham and Kadant go up and down completely randomly.
Pair Corralation between Graham and Kadant
Considering the 90-day investment horizon Graham is expected to generate 1.44 times more return on investment than Kadant. However, Graham is 1.44 times more volatile than Kadant Inc. It trades about 0.12 of its potential returns per unit of risk. Kadant Inc is currently generating about 0.09 per unit of risk. If you would invest 975.00 in Graham on August 23, 2024 and sell it today you would earn a total of 3,299 from holding Graham or generate 338.36% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Graham vs. Kadant Inc
Performance |
| Timeline |
| Graham |
| Kadant Inc |
Graham and Kadant Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Graham and Kadant
The main advantage of trading using opposite Graham and Kadant positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Graham position performs unexpectedly, Kadant 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 Kadant will offset losses from the drop in Kadant's long position.| Graham vs. Luxfer Holdings PLC | Graham vs. Enerpac Tool Group | Graham vs. Kadant Inc | Graham vs. Omega Flex |
| Kadant vs. Small Cap Core | Kadant vs. Freedom Holding Corp | Kadant vs. Gfl Environmental Holdings | Kadant vs. Growth Fund Of |
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 Volatility Analysis module to get historical volatility and risk analysis based on latest market data.
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