Correlation Between Kingfisher Plc and Kirklands
Can any of the company-specific risk be diversified away by investing in both Kingfisher Plc and Kirklands 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 Kingfisher Plc and Kirklands into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Kingfisher plc and Kirklands, you can compare the effects of market volatilities on Kingfisher Plc and Kirklands 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 Kingfisher Plc with a short position of Kirklands. Check out your portfolio center. Please also check ongoing floating volatility patterns of Kingfisher Plc and Kirklands.
Diversification Opportunities for Kingfisher Plc and Kirklands
0.75 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Kingfisher and Kirklands is 0.75. Overlapping area represents the amount of risk that can be diversified away by holding Kingfisher plc and Kirklands in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Kirklands and Kingfisher Plc 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 Kingfisher plc are associated (or correlated) with Kirklands. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Kirklands has no effect on the direction of Kingfisher Plc i.e., Kingfisher Plc and Kirklands go up and down completely randomly.
Pair Corralation between Kingfisher Plc and Kirklands
Assuming the 90 days horizon Kingfisher plc is expected to under-perform the Kirklands. In addition to that, Kingfisher Plc is 1.08 times more volatile than Kirklands. It trades about -0.17 of its total potential returns per unit of risk. Kirklands is currently generating about -0.16 per unit of volatility. If you would invest 189.00 in Kirklands on August 25, 2024 and sell it today you would lose (24.00) from holding Kirklands or give up 12.7% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 95.65% |
| Values | Daily Returns |
Kingfisher plc vs. Kirklands
Performance |
| Timeline |
| Kingfisher plc |
| Kirklands |
Kingfisher Plc and Kirklands Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Kingfisher Plc and Kirklands
The main advantage of trading using opposite Kingfisher Plc and Kirklands positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Kingfisher Plc position performs unexpectedly, Kirklands 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 Kirklands will offset losses from the drop in Kirklands' long position.| Kingfisher Plc vs. Lowes Companies | Kingfisher Plc vs. Home Depot | Kingfisher Plc vs. Live Ventures | Kingfisher Plc vs. Haverty Furniture Companies |
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 Pattern Recognition module to use different Pattern Recognition models to time the market across multiple global exchanges.
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