Correlation Between Kadant and Rockwell Automation
Can any of the company-specific risk be diversified away by investing in both Kadant and Rockwell Automation 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 Kadant and Rockwell Automation into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Kadant Inc and Rockwell Automation, you can compare the effects of market volatilities on Kadant and Rockwell Automation 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 Kadant with a short position of Rockwell Automation. Check out your portfolio center. Please also check ongoing floating volatility patterns of Kadant and Rockwell Automation.
Diversification Opportunities for Kadant and Rockwell Automation
0.79 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Kadant and Rockwell is 0.79. Overlapping area represents the amount of risk that can be diversified away by holding Kadant Inc and Rockwell Automation in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Rockwell Automation and Kadant 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 Kadant Inc are associated (or correlated) with Rockwell Automation. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Rockwell Automation has no effect on the direction of Kadant i.e., Kadant and Rockwell Automation go up and down completely randomly.
Pair Corralation between Kadant and Rockwell Automation
Considering the 90-day investment horizon Kadant Inc is expected to generate 1.08 times more return on investment than Rockwell Automation. However, Kadant is 1.08 times more volatile than Rockwell Automation. It trades about 0.16 of its potential returns per unit of risk. Rockwell Automation is currently generating about 0.04 per unit of risk. If you would invest 26,946 in Kadant Inc on August 24, 2024 and sell it today you would earn a total of 13,896 from holding Kadant Inc or generate 51.57% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Kadant Inc vs. Rockwell Automation
Performance |
| Timeline |
| Kadant Inc |
| Rockwell Automation |
Kadant and Rockwell Automation Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Kadant and Rockwell Automation
The main advantage of trading using opposite Kadant and Rockwell Automation positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Kadant position performs unexpectedly, Rockwell Automation 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 Rockwell Automation will offset losses from the drop in Rockwell Automation's long position.| Kadant vs. Small Cap Core | Kadant vs. Freedom Holding Corp | Kadant vs. Gfl Environmental Holdings | Kadant vs. Growth Fund Of |
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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 File Import module to quickly import all of your third-party portfolios from your local drive in csv format.
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