Correlation Between HEALTHCARE REAL and KENNAMETAL INC
Can any of the company-specific risk be diversified away by investing in both HEALTHCARE REAL 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 HEALTHCARE REAL and KENNAMETAL INC 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 KENNAMETAL INC, you can compare the effects of market volatilities on HEALTHCARE REAL 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 HEALTHCARE REAL with a short position of KENNAMETAL INC. Check out your portfolio center. Please also check ongoing floating volatility patterns of HEALTHCARE REAL and KENNAMETAL INC.
Diversification Opportunities for HEALTHCARE REAL and KENNAMETAL INC
0.65 | Correlation Coefficient |
Poor diversification
The 3 months correlation between HEALTHCARE and KENNAMETAL is 0.65. Overlapping area represents the amount of risk that can be diversified away by holding HEALTHCARE REAL A and KENNAMETAL INC in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on KENNAMETAL INC 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 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 HEALTHCARE REAL i.e., HEALTHCARE REAL and KENNAMETAL INC go up and down completely randomly.
Pair Corralation between HEALTHCARE REAL and KENNAMETAL INC
Assuming the 90 days horizon HEALTHCARE REAL A is expected to generate 1.23 times more return on investment than KENNAMETAL INC. However, HEALTHCARE REAL is 1.23 times more volatile than KENNAMETAL INC. It trades about 0.02 of its potential returns per unit of risk. KENNAMETAL INC is currently generating about -0.22 per unit of risk. If you would invest 1,650 in HEALTHCARE REAL A on September 13, 2024 and sell it today you would earn a total of 10.00 from holding HEALTHCARE REAL A or generate 0.61% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
HEALTHCARE REAL A vs. KENNAMETAL INC
Performance |
| Timeline |
| HEALTHCARE REAL A |
| KENNAMETAL INC |
HEALTHCARE REAL and KENNAMETAL INC Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with HEALTHCARE REAL and KENNAMETAL INC
The main advantage of trading using opposite HEALTHCARE REAL and KENNAMETAL INC positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if HEALTHCARE REAL 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.| HEALTHCARE REAL vs. Apple Inc | HEALTHCARE REAL vs. Apple Inc | HEALTHCARE REAL vs. Apple Inc | HEALTHCARE REAL vs. Apple Inc |
| KENNAMETAL INC vs. Apple Inc | KENNAMETAL INC vs. Apple Inc | KENNAMETAL INC vs. Apple Inc | KENNAMETAL INC vs. Apple Inc |
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 Dashboard module to portfolio dashboard that provides centralized access to all your investments.
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