Correlation Between Kennametal and AMCON Distributing
Can any of the company-specific risk be diversified away by investing in both Kennametal and AMCON Distributing 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 and AMCON Distributing into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Kennametal and AMCON Distributing, you can compare the effects of market volatilities on Kennametal and AMCON Distributing 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 with a short position of AMCON Distributing. Check out your portfolio center. Please also check ongoing floating volatility patterns of Kennametal and AMCON Distributing.
Diversification Opportunities for Kennametal and AMCON Distributing
-0.55 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Kennametal and AMCON is -0.55. Overlapping area represents the amount of risk that can be diversified away by holding Kennametal and AMCON Distributing in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on AMCON Distributing and Kennametal 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 are associated (or correlated) with AMCON Distributing. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of AMCON Distributing has no effect on the direction of Kennametal i.e., Kennametal and AMCON Distributing go up and down completely randomly.
Pair Corralation between Kennametal and AMCON Distributing
Considering the 90-day investment horizon Kennametal is expected to generate 0.73 times more return on investment than AMCON Distributing. However, Kennametal is 1.37 times less risky than AMCON Distributing. It trades about 0.09 of its potential returns per unit of risk. AMCON Distributing is currently generating about -0.01 per unit of risk. If you would invest 2,504 in Kennametal on September 2, 2024 and sell it today you would earn a total of 366.00 from holding Kennametal or generate 14.62% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 96.88% |
| Values | Daily Returns |
Kennametal vs. AMCON Distributing
Performance |
| Timeline |
| Kennametal |
| AMCON Distributing |
Kennametal and AMCON Distributing Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Kennametal and AMCON Distributing
The main advantage of trading using opposite Kennametal and AMCON Distributing positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Kennametal position performs unexpectedly, AMCON Distributing 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 AMCON Distributing will offset losses from the drop in AMCON Distributing's long position.| Kennametal vs. Hillman Solutions Corp | Kennametal vs. AB SKF | Kennametal vs. Lincoln Electric Holdings | Kennametal vs. Toro Co |
| AMCON Distributing vs. Steven Madden | AMCON Distributing vs. Vera Bradley | AMCON Distributing vs. Caleres | AMCON Distributing vs. Wolverine World Wide |
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 Portfolio Comparator module to compare the composition, asset allocations and performance of any two portfolios in your account.
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