Correlation Between Kaman and Embraer SA
Can any of the company-specific risk be diversified away by investing in both Kaman and Embraer SA 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 Kaman and Embraer SA into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Kaman and Embraer SA ADR, you can compare the effects of market volatilities on Kaman and Embraer SA 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 Kaman with a short position of Embraer SA. Check out your portfolio center. Please also check ongoing floating volatility patterns of Kaman and Embraer SA.
Diversification Opportunities for Kaman and Embraer SA
0.58 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Kaman and Embraer is 0.58. Overlapping area represents the amount of risk that can be diversified away by holding Kaman and Embraer SA ADR in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Embraer SA ADR and Kaman 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 Kaman are associated (or correlated) with Embraer SA. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Embraer SA ADR has no effect on the direction of Kaman i.e., Kaman and Embraer SA go up and down completely randomly.
Pair Corralation between Kaman and Embraer SA
If you would invest 3,419 in Embraer SA ADR on August 31, 2024 and sell it today you would earn a total of 401.00 from holding Embraer SA ADR or generate 11.73% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 4.55% |
| Values | Daily Returns |
Kaman vs. Embraer SA ADR
Performance |
| Timeline |
| Kaman |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Very Weak
| Embraer SA ADR |
Kaman and Embraer SA Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Kaman and Embraer SA
The main advantage of trading using opposite Kaman and Embraer SA positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Kaman position performs unexpectedly, Embraer SA 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 Embraer SA will offset losses from the drop in Embraer SA's long position.| Kaman vs. Ducommun Incorporated | Kaman vs. Innovative Solutions and | Kaman vs. National Presto Industries | Kaman vs. Astronics |
| Embraer SA vs. HEICO | Embraer SA vs. Vertical Aerospace | Embraer SA vs. Rolls Royce Holdings plc | Embraer SA vs. Rocket Lab USA |
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 Price Exposure Probability module to analyze equity upside and downside potential for a given time horizon across multiple markets.
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