Correlation Between HEALTHCARE REAL and KIMBALL ELECTRONICS
Can any of the company-specific risk be diversified away by investing in both HEALTHCARE REAL 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 HEALTHCARE REAL and KIMBALL ELECTRONICS into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between HEALTHCARE REAL A and KIMBALL ELECTRONICS, you can compare the effects of market volatilities on HEALTHCARE REAL 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 HEALTHCARE REAL with a short position of KIMBALL ELECTRONICS. Check out your portfolio center. Please also check ongoing floating volatility patterns of HEALTHCARE REAL and KIMBALL ELECTRONICS.
Diversification Opportunities for HEALTHCARE REAL and KIMBALL ELECTRONICS
0.55 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between HEALTHCARE and KIMBALL is 0.55. Overlapping area represents the amount of risk that can be diversified away by holding HEALTHCARE REAL A and KIMBALL ELECTRONICS in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on KIMBALL ELECTRONICS and HEALTHCARE REAL 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 HEALTHCARE REAL A 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 HEALTHCARE REAL i.e., HEALTHCARE REAL and KIMBALL ELECTRONICS go up and down completely randomly.
Pair Corralation between HEALTHCARE REAL and KIMBALL ELECTRONICS
Assuming the 90 days horizon HEALTHCARE REAL A is expected to generate 0.5 times more return on investment than KIMBALL ELECTRONICS. However, HEALTHCARE REAL A is 2.01 times less risky than KIMBALL ELECTRONICS. It trades about 0.11 of its potential returns per unit of risk. KIMBALL ELECTRONICS is currently generating about -0.03 per unit of risk. If you would invest 1,424 in HEALTHCARE REAL A on September 1, 2024 and sell it today you would earn a total of 296.00 from holding HEALTHCARE REAL A or generate 20.79% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
HEALTHCARE REAL A vs. KIMBALL ELECTRONICS
Performance |
| Timeline |
| HEALTHCARE REAL A |
| KIMBALL ELECTRONICS |
HEALTHCARE REAL and KIMBALL ELECTRONICS Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with HEALTHCARE REAL and KIMBALL ELECTRONICS
The main advantage of trading using opposite HEALTHCARE REAL and KIMBALL ELECTRONICS positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if HEALTHCARE REAL 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.| HEALTHCARE REAL vs. Apple Inc | HEALTHCARE REAL vs. Apple Inc | HEALTHCARE REAL vs. Apple Inc | HEALTHCARE REAL 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 Portfolio Analyzer module to portfolio analysis module that provides access to portfolio diagnostics and optimization engine.
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