Correlation Between Kadant and Standex International
Can any of the company-specific risk be diversified away by investing in both Kadant and Standex International 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 Standex International into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Kadant Inc and Standex International, you can compare the effects of market volatilities on Kadant and Standex International 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 Standex International. Check out your portfolio center. Please also check ongoing floating volatility patterns of Kadant and Standex International.
Diversification Opportunities for Kadant and Standex International
0.97 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between Kadant and Standex is 0.97. Overlapping area represents the amount of risk that can be diversified away by holding Kadant Inc and Standex International in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Standex International 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 Standex International. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Standex International has no effect on the direction of Kadant i.e., Kadant and Standex International go up and down completely randomly.
Pair Corralation between Kadant and Standex International
Considering the 90-day investment horizon Kadant Inc is expected to generate 0.89 times more return on investment than Standex International. However, Kadant Inc is 1.12 times less risky than Standex International. It trades about 0.43 of its potential returns per unit of risk. Standex International is currently generating about 0.23 per unit of risk. If you would invest 33,306 in Kadant Inc on September 1, 2024 and sell it today you would earn a total of 7,973 from holding Kadant Inc or generate 23.94% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Kadant Inc vs. Standex International
Performance |
| Timeline |
| Kadant Inc |
| Standex International |
Kadant and Standex International Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Kadant and Standex International
The main advantage of trading using opposite Kadant and Standex International positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Kadant position performs unexpectedly, Standex International 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 Standex International will offset losses from the drop in Standex International's long position.The idea behind Kadant Inc and Standex International pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.| Standex International vs. Gorman Rupp | Standex International vs. Franklin Electric Co | Standex International vs. Omega Flex | Standex International vs. China Yuchai International |
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 Options Analysis module to analyze and evaluate options and option chains as a potential hedge for your portfolios.
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