Correlation Between KENNAMETAL INC and JCDecaux
Can any of the company-specific risk be diversified away by investing in both KENNAMETAL INC and JCDecaux 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 JCDecaux into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between KENNAMETAL INC and JCDecaux SA, you can compare the effects of market volatilities on KENNAMETAL INC and JCDecaux 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 JCDecaux. Check out your portfolio center. Please also check ongoing floating volatility patterns of KENNAMETAL INC and JCDecaux.
Diversification Opportunities for KENNAMETAL INC and JCDecaux
-0.85 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between KENNAMETAL and JCDecaux is -0.85. Overlapping area represents the amount of risk that can be diversified away by holding KENNAMETAL INC and JCDecaux SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on JCDecaux SA 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 JCDecaux. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of JCDecaux SA has no effect on the direction of KENNAMETAL INC i.e., KENNAMETAL INC and JCDecaux go up and down completely randomly.
Pair Corralation between KENNAMETAL INC and JCDecaux
Assuming the 90 days trading horizon KENNAMETAL INC is expected to under-perform the JCDecaux. But the stock apears to be less risky and, when comparing its historical volatility, KENNAMETAL INC is 1.19 times less risky than JCDecaux. The stock trades about -0.58 of its potential returns per unit of risk. The JCDecaux SA is currently generating about 0.08 of returns per unit of risk over similar time horizon. If you would invest 1,441 in JCDecaux SA on September 25, 2024 and sell it today you would earn a total of 36.00 from holding JCDecaux SA or generate 2.5% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
KENNAMETAL INC vs. JCDecaux SA
Performance |
| Timeline |
| KENNAMETAL INC |
| JCDecaux SA |
KENNAMETAL INC and JCDecaux Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with KENNAMETAL INC and JCDecaux
The main advantage of trading using opposite KENNAMETAL INC and JCDecaux positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if KENNAMETAL INC position performs unexpectedly, JCDecaux 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 JCDecaux will offset losses from the drop in JCDecaux's long position.| KENNAMETAL INC vs. Apple Inc | KENNAMETAL INC vs. Apple Inc | KENNAMETAL INC vs. Apple Inc | KENNAMETAL INC vs. Microsoft |
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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 Commodity Directory module to find actively traded commodities issued by global exchanges.
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