Correlation Between Kimball Electronics and Plexus Corp
Can any of the company-specific risk be diversified away by investing in both Kimball Electronics and Plexus Corp 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 Plexus Corp into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Kimball Electronics and Plexus Corp, you can compare the effects of market volatilities on Kimball Electronics and Plexus Corp 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 Plexus Corp. Check out your portfolio center. Please also check ongoing floating volatility patterns of Kimball Electronics and Plexus Corp.
Diversification Opportunities for Kimball Electronics and Plexus Corp
0.84 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Kimball and Plexus is 0.84. Overlapping area represents the amount of risk that can be diversified away by holding Kimball Electronics and Plexus Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Plexus Corp 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 Plexus Corp. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Plexus Corp has no effect on the direction of Kimball Electronics i.e., Kimball Electronics and Plexus Corp go up and down completely randomly.
Pair Corralation between Kimball Electronics and Plexus Corp
Allowing for the 90-day total investment horizon Kimball Electronics is expected to generate 1.32 times less return on investment than Plexus Corp. In addition to that, Kimball Electronics is 1.05 times more volatile than Plexus Corp. It trades about 0.18 of its total potential returns per unit of risk. Plexus Corp is currently generating about 0.25 per unit of volatility. If you would invest 14,410 in Plexus Corp on September 1, 2024 and sell it today you would earn a total of 2,030 from holding Plexus Corp or generate 14.09% 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. Plexus Corp
Performance |
| Timeline |
| Kimball Electronics |
| Plexus Corp |
Kimball Electronics and Plexus Corp Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Kimball Electronics and Plexus Corp
The main advantage of trading using opposite Kimball Electronics and Plexus Corp positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Kimball Electronics position performs unexpectedly, Plexus Corp 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 Plexus Corp will offset losses from the drop in Plexus Corp's long position.| Kimball Electronics vs. Desktop Metal | Kimball Electronics vs. Fabrinet | Kimball Electronics vs. Knowles Cor | Kimball Electronics vs. Ubiquiti Networks |
| Plexus Corp vs. Desktop Metal | Plexus Corp vs. Fabrinet | Plexus Corp vs. Knowles Cor | Plexus Corp 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 Fundamental Analysis module to view fundamental data based on most recent published financial statements.
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