Correlation Between Kimball Electronics and Knowles Cor
Can any of the company-specific risk be diversified away by investing in both Kimball Electronics and Knowles Cor 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 Knowles Cor into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Kimball Electronics and Knowles Cor, you can compare the effects of market volatilities on Kimball Electronics and Knowles Cor 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 Knowles Cor. Check out your portfolio center. Please also check ongoing floating volatility patterns of Kimball Electronics and Knowles Cor.
Diversification Opportunities for Kimball Electronics and Knowles Cor
0.87 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Kimball and Knowles is 0.87. Overlapping area represents the amount of risk that can be diversified away by holding Kimball Electronics and Knowles Cor in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Knowles Cor 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 Knowles Cor. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Knowles Cor has no effect on the direction of Kimball Electronics i.e., Kimball Electronics and Knowles Cor go up and down completely randomly.
Pair Corralation between Kimball Electronics and Knowles Cor
Allowing for the 90-day total investment horizon Kimball Electronics is expected to under-perform the Knowles Cor. In addition to that, Kimball Electronics is 1.18 times more volatile than Knowles Cor. It trades about -0.03 of its total potential returns per unit of risk. Knowles Cor is currently generating about 0.06 per unit of volatility. If you would invest 1,723 in Knowles Cor on September 2, 2024 and sell it today you would earn a total of 223.00 from holding Knowles Cor or generate 12.94% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Kimball Electronics vs. Knowles Cor
Performance |
| Timeline |
| Kimball Electronics |
| Knowles Cor |
Kimball Electronics and Knowles Cor Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Kimball Electronics and Knowles Cor
The main advantage of trading using opposite Kimball Electronics and Knowles Cor positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Kimball Electronics position performs unexpectedly, Knowles Cor 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 Knowles Cor will offset losses from the drop in Knowles Cor's long position.| Kimball Electronics vs. Hayward Holdings | Kimball Electronics vs. Enersys | Kimball Electronics vs. Espey Mfg Electronics | Kimball Electronics vs. Advanced Energy Industries |
| Knowles Cor vs. Mynaric AG ADR | Knowles Cor vs. Comtech Telecommunications Corp | Knowles Cor vs. Ituran Location and | Knowles Cor vs. Aviat 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 Portfolio Optimization module to compute new portfolio that will generate highest expected return given your specified tolerance for risk.
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