Correlation Between KENNAMETAL INC and Retail Estates
Can any of the company-specific risk be diversified away by investing in both KENNAMETAL INC and Retail Estates 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 Retail Estates into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between KENNAMETAL INC and Retail Estates NV, you can compare the effects of market volatilities on KENNAMETAL INC and Retail Estates 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 Retail Estates. Check out your portfolio center. Please also check ongoing floating volatility patterns of KENNAMETAL INC and Retail Estates.
Diversification Opportunities for KENNAMETAL INC and Retail Estates
-0.81 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between KENNAMETAL and Retail is -0.81. Overlapping area represents the amount of risk that can be diversified away by holding KENNAMETAL INC and Retail Estates NV in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Retail Estates NV 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 Retail Estates. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Retail Estates NV has no effect on the direction of KENNAMETAL INC i.e., KENNAMETAL INC and Retail Estates go up and down completely randomly.
Pair Corralation between KENNAMETAL INC and Retail Estates
Assuming the 90 days trading horizon KENNAMETAL INC is expected to generate 3.17 times more return on investment than Retail Estates. However, KENNAMETAL INC is 3.17 times more volatile than Retail Estates NV. It trades about 0.14 of its potential returns per unit of risk. Retail Estates NV is currently generating about -0.27 per unit of risk. If you would invest 2,343 in KENNAMETAL INC on August 29, 2024 and sell it today you would earn a total of 437.00 from holding KENNAMETAL INC or generate 18.65% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Significant |
| Accuracy | 97.67% |
| Values | Daily Returns |
KENNAMETAL INC vs. Retail Estates NV
Performance |
| Timeline |
| KENNAMETAL INC |
| Retail Estates NV |
KENNAMETAL INC and Retail Estates Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with KENNAMETAL INC and Retail Estates
The main advantage of trading using opposite KENNAMETAL INC and Retail Estates positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if KENNAMETAL INC position performs unexpectedly, Retail Estates 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 Retail Estates will offset losses from the drop in Retail Estates' long position.| KENNAMETAL INC vs. China Datang | KENNAMETAL INC vs. QUEEN S ROAD | KENNAMETAL INC vs. GOLD ROAD RES | KENNAMETAL INC vs. TERADATA |
| Retail Estates vs. DEVRY EDUCATION GRP | Retail Estates vs. MAGIC SOFTWARE ENTR | Retail Estates vs. EMBARK EDUCATION LTD | Retail Estates vs. GALENA MINING LTD |
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 Money Flow Index module to determine momentum by analyzing Money Flow Index and other technical indicators.
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