Correlation Between KENNAMETAL INC and Gladstone Investment
Can any of the company-specific risk be diversified away by investing in both KENNAMETAL INC and Gladstone Investment 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 KENNAMETAL INC and Gladstone Investment into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between KENNAMETAL INC and Gladstone Investment, you can compare the effects of market volatilities on KENNAMETAL INC and Gladstone Investment 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 KENNAMETAL INC with a short position of Gladstone Investment. Check out your portfolio center. Please also check ongoing floating volatility patterns of KENNAMETAL INC and Gladstone Investment.
Diversification Opportunities for KENNAMETAL INC and Gladstone Investment
0.56 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between KENNAMETAL and Gladstone is 0.56. Overlapping area represents the amount of risk that can be diversified away by holding KENNAMETAL INC and Gladstone Investment in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Gladstone Investment and KENNAMETAL INC 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 KENNAMETAL INC are associated (or correlated) with Gladstone Investment. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Gladstone Investment has no effect on the direction of KENNAMETAL INC i.e., KENNAMETAL INC and Gladstone Investment go up and down completely randomly.
Pair Corralation between KENNAMETAL INC and Gladstone Investment
Assuming the 90 days trading horizon KENNAMETAL INC is expected to generate 1.17 times more return on investment than Gladstone Investment. However, KENNAMETAL INC is 1.17 times more volatile than Gladstone Investment. It trades about 0.06 of its potential returns per unit of risk. Gladstone Investment is currently generating about 0.05 per unit of risk. If you would invest 2,322 in KENNAMETAL INC on August 31, 2024 and sell it today you would earn a total of 358.00 from holding KENNAMETAL INC or generate 15.42% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
KENNAMETAL INC vs. Gladstone Investment
Performance |
| Timeline |
| KENNAMETAL INC |
| Gladstone Investment |
KENNAMETAL INC and Gladstone Investment Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with KENNAMETAL INC and Gladstone Investment
The main advantage of trading using opposite KENNAMETAL INC and Gladstone Investment positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if KENNAMETAL INC position performs unexpectedly, Gladstone Investment 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 Gladstone Investment will offset losses from the drop in Gladstone Investment's long position.| KENNAMETAL INC vs. Siamgas And Petrochemicals | KENNAMETAL INC vs. CVS Health | KENNAMETAL INC vs. AIR PRODCHEMICALS | KENNAMETAL INC vs. RYU Apparel |
| Gladstone Investment vs. QUEEN S ROAD | Gladstone Investment vs. Air Transport Services | Gladstone Investment vs. Gold Road Resources | Gladstone Investment vs. GOLD ROAD RES |
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 Share Portfolio module to track or share privately all of your investments from the convenience of any device.
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