Correlation Between KENNAMETAL INC and Globe Trade
Can any of the company-specific risk be diversified away by investing in both KENNAMETAL INC and Globe Trade 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 Globe Trade into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between KENNAMETAL INC and Globe Trade Centre, you can compare the effects of market volatilities on KENNAMETAL INC and Globe Trade 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 Globe Trade. Check out your portfolio center. Please also check ongoing floating volatility patterns of KENNAMETAL INC and Globe Trade.
Diversification Opportunities for KENNAMETAL INC and Globe Trade
-0.29 | Correlation Coefficient |
Very good diversification
The 3 months correlation between KENNAMETAL and Globe is -0.29. Overlapping area represents the amount of risk that can be diversified away by holding KENNAMETAL INC and Globe Trade Centre in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Globe Trade Centre 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 Globe Trade. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Globe Trade Centre has no effect on the direction of KENNAMETAL INC i.e., KENNAMETAL INC and Globe Trade go up and down completely randomly.
Pair Corralation between KENNAMETAL INC and Globe Trade
Assuming the 90 days trading horizon KENNAMETAL INC is expected to generate 0.92 times more return on investment than Globe Trade. However, KENNAMETAL INC is 1.09 times less risky than Globe Trade. It trades about 0.07 of its potential returns per unit of risk. Globe Trade Centre is currently generating about 0.01 per unit of risk. If you would invest 2,205 in KENNAMETAL INC on September 3, 2024 and sell it today you would earn a total of 475.00 from holding KENNAMETAL INC or generate 21.54% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
KENNAMETAL INC vs. Globe Trade Centre
Performance |
| Timeline |
| KENNAMETAL INC |
| Globe Trade Centre |
KENNAMETAL INC and Globe Trade Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with KENNAMETAL INC and Globe Trade
The main advantage of trading using opposite KENNAMETAL INC and Globe Trade positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if KENNAMETAL INC position performs unexpectedly, Globe Trade 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 Globe Trade will offset losses from the drop in Globe Trade's long position.| KENNAMETAL INC vs. TOTAL GABON | KENNAMETAL INC vs. Walgreens Boots Alliance | KENNAMETAL INC vs. Peak Resources Limited |
| Globe Trade vs. National Health Investors | Globe Trade vs. ONWARD MEDICAL BV | Globe Trade vs. FEMALE HEALTH | Globe Trade vs. Compugroup Medical SE |
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 Pair Correlation module to compare performance and examine fundamental relationship between any two equity instruments.
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