Correlation Between Mueller Water and Kadant
Can any of the company-specific risk be diversified away by investing in both Mueller Water and Kadant 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 Mueller Water and Kadant into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Mueller Water Products and Kadant Inc, you can compare the effects of market volatilities on Mueller Water and Kadant 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 Mueller Water with a short position of Kadant. Check out your portfolio center. Please also check ongoing floating volatility patterns of Mueller Water and Kadant.
Diversification Opportunities for Mueller Water and Kadant
0.91 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between Mueller and Kadant is 0.91. Overlapping area represents the amount of risk that can be diversified away by holding Mueller Water Products and Kadant Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Kadant Inc and Mueller Water 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 Mueller Water Products are associated (or correlated) with Kadant. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Kadant Inc has no effect on the direction of Mueller Water i.e., Mueller Water and Kadant go up and down completely randomly.
Pair Corralation between Mueller Water and Kadant
Considering the 90-day investment horizon Mueller Water is expected to generate 2.07 times less return on investment than Kadant. In addition to that, Mueller Water is 1.05 times more volatile than Kadant Inc. It trades about 0.27 of its total potential returns per unit of risk. Kadant Inc is currently generating about 0.58 per unit of volatility. If you would invest 32,055 in Kadant Inc on August 30, 2024 and sell it today you would earn a total of 10,238 from holding Kadant Inc or generate 31.94% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 95.65% |
| Values | Daily Returns |
Mueller Water Products vs. Kadant Inc
Performance |
| Timeline |
| Mueller Water Products |
| Kadant Inc |
Mueller Water and Kadant Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Mueller Water and Kadant
The main advantage of trading using opposite Mueller Water and Kadant positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Mueller Water position performs unexpectedly, Kadant 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 Kadant will offset losses from the drop in Kadant's long position.| Mueller Water vs. Enerpac Tool Group | Mueller Water vs. Luxfer Holdings PLC | Mueller Water vs. John Bean Technologies | Mueller Water vs. CSW Industrials |
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 Balance Of Power module to check stock momentum by analyzing Balance Of Power indicator and other technical ratios.
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