Correlation Between Kewaunee Scientific and Richelieu Hardware
Can any of the company-specific risk be diversified away by investing in both Kewaunee Scientific and Richelieu Hardware 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 Kewaunee Scientific and Richelieu Hardware into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Kewaunee Scientific and Richelieu Hardware, you can compare the effects of market volatilities on Kewaunee Scientific and Richelieu Hardware 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 Kewaunee Scientific with a short position of Richelieu Hardware. Check out your portfolio center. Please also check ongoing floating volatility patterns of Kewaunee Scientific and Richelieu Hardware.
Diversification Opportunities for Kewaunee Scientific and Richelieu Hardware
-0.37 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Kewaunee and Richelieu is -0.37. Overlapping area represents the amount of risk that can be diversified away by holding Kewaunee Scientific and Richelieu Hardware in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Richelieu Hardware and Kewaunee Scientific 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 Kewaunee Scientific are associated (or correlated) with Richelieu Hardware. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Richelieu Hardware has no effect on the direction of Kewaunee Scientific i.e., Kewaunee Scientific and Richelieu Hardware go up and down completely randomly.
Pair Corralation between Kewaunee Scientific and Richelieu Hardware
Given the investment horizon of 90 days Kewaunee Scientific is expected to generate 7.83 times more return on investment than Richelieu Hardware. However, Kewaunee Scientific is 7.83 times more volatile than Richelieu Hardware. It trades about 0.27 of its potential returns per unit of risk. Richelieu Hardware is currently generating about 0.25 per unit of risk. If you would invest 3,809 in Kewaunee Scientific on September 15, 2024 and sell it today you would earn a total of 1,530 from holding Kewaunee Scientific or generate 40.17% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 95.45% |
| Values | Daily Returns |
Kewaunee Scientific vs. Richelieu Hardware
Performance |
| Timeline |
| Kewaunee Scientific |
| Richelieu Hardware |
Kewaunee Scientific and Richelieu Hardware Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Kewaunee Scientific and Richelieu Hardware
The main advantage of trading using opposite Kewaunee Scientific and Richelieu Hardware positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Kewaunee Scientific position performs unexpectedly, Richelieu Hardware 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 Richelieu Hardware will offset losses from the drop in Richelieu Hardware's long position.| Kewaunee Scientific vs. Hamilton Beach Brands | Kewaunee Scientific vs. Mohawk Industries | Kewaunee Scientific vs. Whirlpool | Kewaunee Scientific vs. iRobot |
| Richelieu Hardware vs. Kewaunee Scientific | Richelieu Hardware vs. Hamilton Beach Brands | Richelieu Hardware vs. Mohawk Industries | Richelieu Hardware vs. Whirlpool |
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 Piotroski F Score module to get Piotroski F Score based on the binary analysis strategy of nine different fundamentals.
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