Correlation Between Kimball Electronics and Motorola Solutions
Can any of the company-specific risk be diversified away by investing in both Kimball Electronics and Motorola Solutions 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 Motorola Solutions into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Kimball Electronics and Motorola Solutions, you can compare the effects of market volatilities on Kimball Electronics and Motorola Solutions 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 Motorola Solutions. Check out your portfolio center. Please also check ongoing floating volatility patterns of Kimball Electronics and Motorola Solutions.
Diversification Opportunities for Kimball Electronics and Motorola Solutions
0.63 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Kimball and Motorola is 0.63. Overlapping area represents the amount of risk that can be diversified away by holding Kimball Electronics and Motorola Solutions in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Motorola Solutions 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 Motorola Solutions. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Motorola Solutions has no effect on the direction of Kimball Electronics i.e., Kimball Electronics and Motorola Solutions go up and down completely randomly.
Pair Corralation between Kimball Electronics and Motorola Solutions
Allowing for the 90-day total investment horizon Kimball Electronics is expected to under-perform the Motorola Solutions. In addition to that, Kimball Electronics is 2.07 times more volatile than Motorola Solutions. It trades about -0.03 of its total potential returns per unit of risk. Motorola Solutions is currently generating about 0.14 per unit of volatility. If you would invest 32,508 in Motorola Solutions on October 20, 2024 and sell it today you would earn a total of 13,978 from holding Motorola Solutions or generate 43.0% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Kimball Electronics vs. Motorola Solutions
Performance |
| Timeline |
| Kimball Electronics |
| Motorola Solutions |
Kimball Electronics and Motorola Solutions Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Kimball Electronics and Motorola Solutions
The main advantage of trading using opposite Kimball Electronics and Motorola Solutions positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Kimball Electronics position performs unexpectedly, Motorola Solutions 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 Motorola Solutions will offset losses from the drop in Motorola Solutions' long position.| Kimball Electronics vs. Hayward Holdings | Kimball Electronics vs. Enersys | Kimball Electronics vs. Espey Mfg Electronics | Kimball Electronics vs. Advanced Energy Industries |
| Motorola Solutions vs. Siyata Mobile | Motorola Solutions vs. SatixFy Communications | Motorola Solutions vs. Mobilicom Limited American | Motorola Solutions vs. Aquagold 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 Instant Ratings module to determine any equity ratings based on digital recommendations. Macroaxis instant equity ratings are based on combination of fundamental analysis and risk-adjusted market performance.
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