Correlation Between Kimball Electronics and Preformed Line
Can any of the company-specific risk be diversified away by investing in both Kimball Electronics and Preformed Line 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 Preformed Line into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Kimball Electronics and Preformed Line Products, you can compare the effects of market volatilities on Kimball Electronics and Preformed Line 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 Preformed Line. Check out your portfolio center. Please also check ongoing floating volatility patterns of Kimball Electronics and Preformed Line.
Diversification Opportunities for Kimball Electronics and Preformed Line
0.79 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Kimball and Preformed is 0.79. Overlapping area represents the amount of risk that can be diversified away by holding Kimball Electronics and Preformed Line Products in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Preformed Line Products 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 Preformed Line. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Preformed Line Products has no effect on the direction of Kimball Electronics i.e., Kimball Electronics and Preformed Line go up and down completely randomly.
Pair Corralation between Kimball Electronics and Preformed Line
Allowing for the 90-day total investment horizon Kimball Electronics is expected to under-perform the Preformed Line. But the stock apears to be less risky and, when comparing its historical volatility, Kimball Electronics is 1.04 times less risky than Preformed Line. The stock trades about -0.04 of its potential returns per unit of risk. The Preformed Line Products is currently generating about 0.02 of returns per unit of risk over similar time horizon. If you would invest 13,183 in Preformed Line Products on August 24, 2024 and sell it today you would earn a total of 437.00 from holding Preformed Line Products or generate 3.31% 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. Preformed Line Products
Performance |
| Timeline |
| Kimball Electronics |
| Preformed Line Products |
Kimball Electronics and Preformed Line Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Kimball Electronics and Preformed Line
The main advantage of trading using opposite Kimball Electronics and Preformed Line positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Kimball Electronics position performs unexpectedly, Preformed Line 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 Preformed Line will offset losses from the drop in Preformed Line's long position.| Kimball Electronics vs. MKS Instruments | Kimball Electronics vs. Axcelis Technologies | Kimball Electronics vs. Entegris | Kimball Electronics vs. Cohu Inc |
| Preformed Line vs. Kimball Electronics | Preformed Line vs. nVent Electric PLC | Preformed Line vs. Espey Mfg Electronics | Preformed Line vs. Hubbell |
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 Stock Screener module to find equities using a custom stock filter or screen asymmetry in trading patterns, price, volume, or investment outlook..
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