Correlation Between KWESST Micro and National Presto
Can any of the company-specific risk be diversified away by investing in both KWESST Micro and National Presto 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 KWESST Micro and National Presto into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between KWESST Micro Systems and National Presto Industries, you can compare the effects of market volatilities on KWESST Micro and National Presto 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 KWESST Micro with a short position of National Presto. Check out your portfolio center. Please also check ongoing floating volatility patterns of KWESST Micro and National Presto.
Diversification Opportunities for KWESST Micro and National Presto
-0.43 | Correlation Coefficient |
Very good diversification
The 3 months correlation between KWESST and National is -0.43. Overlapping area represents the amount of risk that can be diversified away by holding KWESST Micro Systems and National Presto Industries in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on National Presto Indu and KWESST Micro 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 KWESST Micro Systems are associated (or correlated) with National Presto. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of National Presto Indu has no effect on the direction of KWESST Micro i.e., KWESST Micro and National Presto go up and down completely randomly.
Pair Corralation between KWESST Micro and National Presto
Considering the 90-day investment horizon KWESST Micro Systems is expected to under-perform the National Presto. In addition to that, KWESST Micro is 4.3 times more volatile than National Presto Industries. It trades about -0.23 of its total potential returns per unit of risk. National Presto Industries is currently generating about 0.11 per unit of volatility. If you would invest 7,509 in National Presto Industries on August 30, 2024 and sell it today you would earn a total of 349.00 from holding National Presto Industries or generate 4.65% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
KWESST Micro Systems vs. National Presto Industries
Performance |
| Timeline |
| KWESST Micro Systems |
| National Presto Indu |
KWESST Micro and National Presto Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with KWESST Micro and National Presto
The main advantage of trading using opposite KWESST Micro and National Presto positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if KWESST Micro position performs unexpectedly, National Presto 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 National Presto will offset losses from the drop in National Presto's long position.| KWESST Micro vs. Ducommun Incorporated | KWESST Micro vs. Park Electrochemical | KWESST Micro vs. National Presto Industries | KWESST Micro vs. Woodward |
| National Presto vs. Park Electrochemical | National Presto vs. Ducommun Incorporated | National Presto vs. Innovative Solutions and | National Presto vs. VSE Corporation |
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 Volatility module to check portfolio volatility and analyze historical return density to properly model market risk.
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