Correlation Between Kimball Electronics and Fabrinet
Can any of the company-specific risk be diversified away by investing in both Kimball Electronics and Fabrinet 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 Kimball Electronics and Fabrinet into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Kimball Electronics and Fabrinet, you can compare the effects of market volatilities on Kimball Electronics and Fabrinet 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 Kimball Electronics with a short position of Fabrinet. Check out your portfolio center. Please also check ongoing floating volatility patterns of Kimball Electronics and Fabrinet.
Diversification Opportunities for Kimball Electronics and Fabrinet
0.33 | Correlation Coefficient |
Weak diversification
The 3 months correlation between Kimball and Fabrinet is 0.33. Overlapping area represents the amount of risk that can be diversified away by holding Kimball Electronics and Fabrinet in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Fabrinet and Kimball Electronics 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 Kimball Electronics are associated (or correlated) with Fabrinet. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Fabrinet has no effect on the direction of Kimball Electronics i.e., Kimball Electronics and Fabrinet go up and down completely randomly.
Pair Corralation between Kimball Electronics and Fabrinet
Allowing for the 90-day total investment horizon Kimball Electronics is expected to generate 0.64 times more return on investment than Fabrinet. However, Kimball Electronics is 1.56 times less risky than Fabrinet. It trades about 0.18 of its potential returns per unit of risk. Fabrinet is currently generating about -0.01 per unit of risk. If you would invest 1,779 in Kimball Electronics on September 1, 2024 and sell it today you would earn a total of 182.00 from holding Kimball Electronics or generate 10.23% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Kimball Electronics vs. Fabrinet
Performance |
| Timeline |
| Kimball Electronics |
| Fabrinet |
Kimball Electronics and Fabrinet Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Kimball Electronics and Fabrinet
The main advantage of trading using opposite Kimball Electronics and Fabrinet positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Kimball Electronics position performs unexpectedly, Fabrinet 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 Fabrinet will offset losses from the drop in Fabrinet's long position.| Kimball Electronics vs. Desktop Metal | Kimball Electronics vs. Fabrinet | Kimball Electronics vs. Knowles Cor | Kimball Electronics vs. Ubiquiti Networks |
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 Competition Analyzer module to analyze and compare many basic indicators for a group of related or unrelated entities.
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