Correlation Between James River and Kimball Electronics
Can any of the company-specific risk be diversified away by investing in both James River 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 James River and Kimball Electronics into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between James River Group and Kimball Electronics, you can compare the effects of market volatilities on James River 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 James River with a short position of Kimball Electronics. Check out your portfolio center. Please also check ongoing floating volatility patterns of James River and Kimball Electronics.
Diversification Opportunities for James River and Kimball Electronics
0.68 | Correlation Coefficient |
Poor diversification
The 3 months correlation between James and Kimball is 0.68. Overlapping area represents the amount of risk that can be diversified away by holding James River Group and Kimball Electronics in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Kimball Electronics and James River 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 James River Group 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 James River i.e., James River and Kimball Electronics go up and down completely randomly.
Pair Corralation between James River and Kimball Electronics
Given the investment horizon of 90 days James River Group is expected to under-perform the Kimball Electronics. In addition to that, James River is 1.73 times more volatile than Kimball Electronics. It trades about -0.06 of its total potential returns per unit of risk. Kimball Electronics is currently generating about -0.07 per unit of volatility. If you would invest 1,731 in Kimball Electronics on January 7, 2025 and sell it today you would lose (401.00) from holding Kimball Electronics or give up 23.17% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
James River Group vs. Kimball Electronics
Performance |
| Timeline |
| James River Group |
| Kimball Electronics |
James River and Kimball Electronics Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with James River and Kimball Electronics
The main advantage of trading using opposite James River and Kimball Electronics positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if James River 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' long position.| James River vs. Employers Holdings | James River vs. Investors Title | James River vs. AMERISAFE | James River vs. Essent Group |
| Kimball Electronics vs. Hayward Holdings | Kimball Electronics vs. Enersys | Kimball Electronics vs. Espey Mfg Electronics | Kimball Electronics vs. Advanced Energy Industries |
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 Fundamentals Comparison module to compare fundamentals across multiple equities to find investing opportunities.
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