Correlation Between KENNAMETAL INC and MOLSON RS
Can any of the company-specific risk be diversified away by investing in both KENNAMETAL INC and MOLSON RS 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 MOLSON RS into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between KENNAMETAL INC and MOLSON RS BEVERAGE, you can compare the effects of market volatilities on KENNAMETAL INC and MOLSON RS 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 MOLSON RS. Check out your portfolio center. Please also check ongoing floating volatility patterns of KENNAMETAL INC and MOLSON RS.
Diversification Opportunities for KENNAMETAL INC and MOLSON RS
0.79 | Correlation Coefficient |
Poor diversification
The 3 months correlation between KENNAMETAL and MOLSON is 0.79. Overlapping area represents the amount of risk that can be diversified away by holding KENNAMETAL INC and MOLSON RS BEVERAGE in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on MOLSON RS BEVERAGE 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 MOLSON RS. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of MOLSON RS BEVERAGE has no effect on the direction of KENNAMETAL INC i.e., KENNAMETAL INC and MOLSON RS go up and down completely randomly.
Pair Corralation between KENNAMETAL INC and MOLSON RS
Assuming the 90 days trading horizon KENNAMETAL INC is expected to generate 0.72 times more return on investment than MOLSON RS. However, KENNAMETAL INC is 1.38 times less risky than MOLSON RS. It trades about 0.02 of its potential returns per unit of risk. MOLSON RS BEVERAGE is currently generating about 0.0 per unit of risk. If you would invest 2,095 in KENNAMETAL INC on September 24, 2024 and sell it today you would earn a total of 305.00 from holding KENNAMETAL INC or generate 14.56% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
KENNAMETAL INC vs. MOLSON RS BEVERAGE
Performance |
| Timeline |
| KENNAMETAL INC |
| MOLSON RS BEVERAGE |
KENNAMETAL INC and MOLSON RS Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with KENNAMETAL INC and MOLSON RS
The main advantage of trading using opposite KENNAMETAL INC and MOLSON RS positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if KENNAMETAL INC position performs unexpectedly, MOLSON RS 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 MOLSON RS will offset losses from the drop in MOLSON RS'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 Transaction History module to view history of all your transactions and understand their impact on performance.
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