Correlation Between Kennametal and Eastern
Can any of the company-specific risk be diversified away by investing in both Kennametal and Eastern 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 Eastern into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Kennametal and Eastern Co, you can compare the effects of market volatilities on Kennametal and Eastern 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 Eastern. Check out your portfolio center. Please also check ongoing floating volatility patterns of Kennametal and Eastern.
Diversification Opportunities for Kennametal and Eastern
-0.55 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Kennametal and Eastern is -0.55. Overlapping area represents the amount of risk that can be diversified away by holding Kennametal and Eastern Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Eastern 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 Eastern. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Eastern has no effect on the direction of Kennametal i.e., Kennametal and Eastern go up and down completely randomly.
Pair Corralation between Kennametal and Eastern
Considering the 90-day investment horizon Kennametal is expected to generate 1.53 times more return on investment than Eastern. However, Kennametal is 1.53 times more volatile than Eastern Co. It trades about 0.18 of its potential returns per unit of risk. Eastern Co is currently generating about -0.21 per unit of risk. If you would invest 2,493 in Kennametal on August 24, 2024 and sell it today you would earn a total of 390.00 from holding Kennametal or generate 15.64% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Kennametal vs. Eastern Co
Performance |
| Timeline |
| Kennametal |
| Eastern |
Kennametal and Eastern Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Kennametal and Eastern
The main advantage of trading using opposite Kennametal and Eastern positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Kennametal position performs unexpectedly, Eastern 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 Eastern will offset losses from the drop in Eastern's long position.| Kennametal vs. Hillman Solutions Corp | Kennametal vs. AB SKF | Kennametal vs. Lincoln Electric Holdings | Kennametal vs. Toro Co |
| Eastern vs. Timken Company | Eastern vs. Lincoln Electric Holdings | Eastern vs. Hillman Solutions Corp | Eastern vs. AB SKF |
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 Idea Optimizer module to use advanced portfolio builder with pre-computed micro ideas to build optimal portfolio .
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