Correlation Between KENNAMETAL INC and Caseys General
Can any of the company-specific risk be diversified away by investing in both KENNAMETAL INC and Caseys General 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 Caseys General into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between KENNAMETAL INC and Caseys General Stores, you can compare the effects of market volatilities on KENNAMETAL INC and Caseys General 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 Caseys General. Check out your portfolio center. Please also check ongoing floating volatility patterns of KENNAMETAL INC and Caseys General.
Diversification Opportunities for KENNAMETAL INC and Caseys General
0.85 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between KENNAMETAL and Caseys is 0.85. Overlapping area represents the amount of risk that can be diversified away by holding KENNAMETAL INC and Caseys General Stores in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Caseys General Stores 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 Caseys General. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Caseys General Stores has no effect on the direction of KENNAMETAL INC i.e., KENNAMETAL INC and Caseys General go up and down completely randomly.
Pair Corralation between KENNAMETAL INC and Caseys General
Assuming the 90 days trading horizon KENNAMETAL INC is expected to generate 2.01 times more return on investment than Caseys General. However, KENNAMETAL INC is 2.01 times more volatile than Caseys General Stores. It trades about 0.18 of its potential returns per unit of risk. Caseys General Stores is currently generating about 0.21 per unit of risk. If you would invest 2,303 in KENNAMETAL INC on September 1, 2024 and sell it today you would earn a total of 377.00 from holding KENNAMETAL INC or generate 16.37% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
KENNAMETAL INC vs. Caseys General Stores
Performance |
| Timeline |
| KENNAMETAL INC |
| Caseys General Stores |
KENNAMETAL INC and Caseys General Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with KENNAMETAL INC and Caseys General
The main advantage of trading using opposite KENNAMETAL INC and Caseys General positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if KENNAMETAL INC position performs unexpectedly, Caseys General 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 Caseys General will offset losses from the drop in Caseys General's long position.| KENNAMETAL INC vs. Axcelis Technologies | KENNAMETAL INC vs. PKSHA TECHNOLOGY INC | KENNAMETAL INC vs. Playtech plc | KENNAMETAL INC vs. GLG LIFE TECH |
| Caseys General vs. Apple Inc | Caseys General vs. Apple Inc | Caseys General vs. Apple Inc | Caseys General vs. Apple Inc |
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 Price Transformation module to use Price Transformation models to analyze the depth of different equity instruments across global markets.
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