Correlation Between KENNAMETAL INC and G-III APPAREL
Can any of the company-specific risk be diversified away by investing in both KENNAMETAL INC and G-III APPAREL 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 G-III APPAREL into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between KENNAMETAL INC and G III APPAREL GROUP, you can compare the effects of market volatilities on KENNAMETAL INC and G-III APPAREL 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 G-III APPAREL. Check out your portfolio center. Please also check ongoing floating volatility patterns of KENNAMETAL INC and G-III APPAREL.
Diversification Opportunities for KENNAMETAL INC and G-III APPAREL
0.34 | Correlation Coefficient |
Weak diversification
The 3 months correlation between KENNAMETAL and G-III is 0.34. Overlapping area represents the amount of risk that can be diversified away by holding KENNAMETAL INC and G III APPAREL GROUP in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on G III APPAREL 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 G-III APPAREL. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of G III APPAREL has no effect on the direction of KENNAMETAL INC i.e., KENNAMETAL INC and G-III APPAREL go up and down completely randomly.
Pair Corralation between KENNAMETAL INC and G-III APPAREL
Assuming the 90 days trading horizon KENNAMETAL INC is expected to generate 4.75 times less return on investment than G-III APPAREL. But when comparing it to its historical volatility, KENNAMETAL INC is 1.56 times less risky than G-III APPAREL. It trades about 0.02 of its potential returns per unit of risk. G III APPAREL GROUP is currently generating about 0.05 of returns per unit of risk over similar time horizon. If you would invest 1,890 in G III APPAREL GROUP on August 31, 2024 and sell it today you would earn a total of 910.00 from holding G III APPAREL GROUP or generate 48.15% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 99.74% |
| Values | Daily Returns |
KENNAMETAL INC vs. G III APPAREL GROUP
Performance |
| Timeline |
| KENNAMETAL INC |
| G III APPAREL |
KENNAMETAL INC and G-III APPAREL Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with KENNAMETAL INC and G-III APPAREL
The main advantage of trading using opposite KENNAMETAL INC and G-III APPAREL positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if KENNAMETAL INC position performs unexpectedly, G-III APPAREL 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 G-III APPAREL will offset losses from the drop in G-III APPAREL's long position.| KENNAMETAL INC vs. Siamgas And Petrochemicals | KENNAMETAL INC vs. CVS Health | KENNAMETAL INC vs. AIR PRODCHEMICALS | KENNAMETAL INC vs. RYU Apparel |
| G-III APPAREL vs. VULCAN MATERIALS | G-III APPAREL vs. EAGLE MATERIALS | G-III APPAREL vs. Southwest Airlines Co | G-III APPAREL vs. JAPAN AIRLINES |
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 Equity Valuation module to check real value of public entities based on technical and fundamental data.
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