Correlation Between MGP Ingredients and KIMBALL ELECTRONICS
Can any of the company-specific risk be diversified away by investing in both MGP Ingredients and KIMBALL ELECTRONICS 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 MGP Ingredients and KIMBALL ELECTRONICS into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between MGP Ingredients and KIMBALL ELECTRONICS, you can compare the effects of market volatilities on MGP Ingredients and KIMBALL ELECTRONICS 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 MGP Ingredients with a short position of KIMBALL ELECTRONICS. Check out your portfolio center. Please also check ongoing floating volatility patterns of MGP Ingredients and KIMBALL ELECTRONICS.
Diversification Opportunities for MGP Ingredients and KIMBALL ELECTRONICS
-0.72 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between MGP and KIMBALL is -0.72. Overlapping area represents the amount of risk that can be diversified away by holding MGP Ingredients and KIMBALL ELECTRONICS in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on KIMBALL ELECTRONICS and MGP Ingredients 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 MGP Ingredients are associated (or correlated) with KIMBALL ELECTRONICS. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of KIMBALL ELECTRONICS has no effect on the direction of MGP Ingredients i.e., MGP Ingredients and KIMBALL ELECTRONICS go up and down completely randomly.
Pair Corralation between MGP Ingredients and KIMBALL ELECTRONICS
Assuming the 90 days trading horizon MGP Ingredients is expected to under-perform the KIMBALL ELECTRONICS. In addition to that, MGP Ingredients is 1.01 times more volatile than KIMBALL ELECTRONICS. It trades about -0.24 of its total potential returns per unit of risk. KIMBALL ELECTRONICS is currently generating about 0.14 per unit of volatility. If you would invest 1,670 in KIMBALL ELECTRONICS on August 29, 2024 and sell it today you would earn a total of 190.00 from holding KIMBALL ELECTRONICS or generate 11.38% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 95.65% |
| Values | Daily Returns |
MGP Ingredients vs. KIMBALL ELECTRONICS
Performance |
| Timeline |
| MGP Ingredients |
| KIMBALL ELECTRONICS |
MGP Ingredients and KIMBALL ELECTRONICS Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with MGP Ingredients and KIMBALL ELECTRONICS
The main advantage of trading using opposite MGP Ingredients and KIMBALL ELECTRONICS positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if MGP Ingredients position performs unexpectedly, KIMBALL ELECTRONICS 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 KIMBALL ELECTRONICS will offset losses from the drop in KIMBALL ELECTRONICS's long position.| MGP Ingredients vs. KIMBALL ELECTRONICS | MGP Ingredients vs. Arrow Electronics | MGP Ingredients vs. Richardson Electronics | MGP Ingredients vs. Diamondrock Hospitality Co |
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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 Volatility Analysis module to get historical volatility and risk analysis based on latest market data.
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