Correlation Between Emerson Radio and KVH Industries
Can any of the company-specific risk be diversified away by investing in both Emerson Radio and KVH Industries 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 Emerson Radio and KVH Industries into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Emerson Radio and KVH Industries, you can compare the effects of market volatilities on Emerson Radio and KVH Industries 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 Emerson Radio with a short position of KVH Industries. Check out your portfolio center. Please also check ongoing floating volatility patterns of Emerson Radio and KVH Industries.
Diversification Opportunities for Emerson Radio and KVH Industries
-0.22 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Emerson and KVH is -0.22. Overlapping area represents the amount of risk that can be diversified away by holding Emerson Radio and KVH Industries in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on KVH Industries and Emerson Radio 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 Emerson Radio are associated (or correlated) with KVH Industries. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of KVH Industries has no effect on the direction of Emerson Radio i.e., Emerson Radio and KVH Industries go up and down completely randomly.
Pair Corralation between Emerson Radio and KVH Industries
Considering the 90-day investment horizon Emerson Radio is expected to under-perform the KVH Industries. In addition to that, Emerson Radio is 1.44 times more volatile than KVH Industries. It trades about -0.01 of its total potential returns per unit of risk. KVH Industries is currently generating about 0.04 per unit of volatility. If you would invest 484.00 in KVH Industries on August 29, 2024 and sell it today you would earn a total of 63.00 from holding KVH Industries or generate 13.02% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Emerson Radio vs. KVH Industries
Performance |
| Timeline |
| Emerson Radio |
| KVH Industries |
Emerson Radio and KVH Industries Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Emerson Radio and KVH Industries
The main advantage of trading using opposite Emerson Radio and KVH Industries positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Emerson Radio position performs unexpectedly, KVH Industries 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 KVH Industries will offset losses from the drop in KVH Industries' long position.| Emerson Radio vs. VOXX International | Emerson Radio vs. LG Display Co | Emerson Radio vs. Turtle Beach Corp | Emerson Radio vs. Koss Corporation |
| KVH Industries vs. NETGEAR | KVH Industries vs. Merck Company | KVH Industries vs. Pharvaris BV | KVH Industries vs. Brinker International |
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 Alpha Finder module to use alpha and beta coefficients to find investment opportunities after accounting for the risk.
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