Correlation Between Kimball Electronics and Ribbon Communications
Can any of the company-specific risk be diversified away by investing in both Kimball Electronics and Ribbon Communications 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 Ribbon Communications into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Kimball Electronics and Ribbon Communications, you can compare the effects of market volatilities on Kimball Electronics and Ribbon Communications 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 Ribbon Communications. Check out your portfolio center. Please also check ongoing floating volatility patterns of Kimball Electronics and Ribbon Communications.
Diversification Opportunities for Kimball Electronics and Ribbon Communications
0.83 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Kimball and Ribbon is 0.83. Overlapping area represents the amount of risk that can be diversified away by holding Kimball Electronics and Ribbon Communications in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Ribbon Communications 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 Ribbon Communications. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Ribbon Communications has no effect on the direction of Kimball Electronics i.e., Kimball Electronics and Ribbon Communications go up and down completely randomly.
Pair Corralation between Kimball Electronics and Ribbon Communications
Allowing for the 90-day total investment horizon Kimball Electronics is expected to under-perform the Ribbon Communications. But the stock apears to be less risky and, when comparing its historical volatility, Kimball Electronics is 1.44 times less risky than Ribbon Communications. The stock trades about -0.03 of its potential returns per unit of risk. The Ribbon Communications is currently generating about 0.08 of returns per unit of risk over similar time horizon. If you would invest 296.00 in Ribbon Communications on September 2, 2024 and sell it today you would earn a total of 95.00 from holding Ribbon Communications or generate 32.09% 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. Ribbon Communications
Performance |
| Timeline |
| Kimball Electronics |
| Ribbon Communications |
Kimball Electronics and Ribbon Communications Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Kimball Electronics and Ribbon Communications
The main advantage of trading using opposite Kimball Electronics and Ribbon Communications positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Kimball Electronics position performs unexpectedly, Ribbon Communications 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 Ribbon Communications will offset losses from the drop in Ribbon Communications' long position.| Kimball Electronics vs. Hayward Holdings | Kimball Electronics vs. Enersys | Kimball Electronics vs. Espey Mfg Electronics | Kimball Electronics vs. Advanced Energy Industries |
| Ribbon Communications vs. ATN International | Ribbon Communications vs. Liberty Broadband Srs | Ribbon Communications vs. Cable One | Ribbon Communications vs. Consolidated Communications |
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 ETF Categories module to list of ETF categories grouped based on various criteria, such as the investment strategy or type of investments.
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