Correlation Between KENNAMETAL INC and Jacquet Metal
Can any of the company-specific risk be diversified away by investing in both KENNAMETAL INC and Jacquet Metal 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 Jacquet Metal into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between KENNAMETAL INC and Jacquet Metal Service, you can compare the effects of market volatilities on KENNAMETAL INC and Jacquet Metal 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 Jacquet Metal. Check out your portfolio center. Please also check ongoing floating volatility patterns of KENNAMETAL INC and Jacquet Metal.
Diversification Opportunities for KENNAMETAL INC and Jacquet Metal
0.19 | Correlation Coefficient |
Average diversification
The 3 months correlation between KENNAMETAL and Jacquet is 0.19. Overlapping area represents the amount of risk that can be diversified away by holding KENNAMETAL INC and Jacquet Metal Service in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Jacquet Metal Service 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 Jacquet Metal. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Jacquet Metal Service has no effect on the direction of KENNAMETAL INC i.e., KENNAMETAL INC and Jacquet Metal go up and down completely randomly.
Pair Corralation between KENNAMETAL INC and Jacquet Metal
Assuming the 90 days trading horizon KENNAMETAL INC is expected to generate 3.32 times more return on investment than Jacquet Metal. However, KENNAMETAL INC is 3.32 times more volatile than Jacquet Metal Service. It trades about 0.23 of its potential returns per unit of risk. Jacquet Metal Service is currently generating about -0.21 per unit of risk. If you would invest 2,283 in KENNAMETAL INC on August 28, 2024 and sell it today you would earn a total of 477.00 from holding KENNAMETAL INC or generate 20.89% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
KENNAMETAL INC vs. Jacquet Metal Service
Performance |
| Timeline |
| KENNAMETAL INC |
| Jacquet Metal Service |
KENNAMETAL INC and Jacquet Metal Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with KENNAMETAL INC and Jacquet Metal
The main advantage of trading using opposite KENNAMETAL INC and Jacquet Metal positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if KENNAMETAL INC position performs unexpectedly, Jacquet Metal 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 Jacquet Metal will offset losses from the drop in Jacquet Metal's long position.| KENNAMETAL INC vs. Apple Inc | KENNAMETAL INC vs. Apple Inc | KENNAMETAL INC vs. Apple Inc | KENNAMETAL INC vs. Microsoft |
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 Stocks Directory module to find actively traded stocks across global markets.
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