Correlation Between Enpro Industries and Kadant
Can any of the company-specific risk be diversified away by investing in both Enpro Industries 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 Enpro Industries and Kadant into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Enpro Industries and Kadant Inc, you can compare the effects of market volatilities on Enpro Industries 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 Enpro Industries with a short position of Kadant. Check out your portfolio center. Please also check ongoing floating volatility patterns of Enpro Industries and Kadant.
Diversification Opportunities for Enpro Industries and Kadant
0.69 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Enpro and Kadant is 0.69. Overlapping area represents the amount of risk that can be diversified away by holding Enpro Industries and Kadant Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Kadant Inc and Enpro Industries 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 Enpro Industries 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 Enpro Industries i.e., Enpro Industries and Kadant go up and down completely randomly.
Pair Corralation between Enpro Industries and Kadant
Considering the 90-day investment horizon Enpro Industries is expected to generate 1.59 times less return on investment than Kadant. In addition to that, Enpro Industries is 1.11 times more volatile than Kadant Inc. It trades about 0.05 of its total potential returns per unit of risk. Kadant Inc is currently generating about 0.09 per unit of volatility. If you would invest 19,050 in Kadant Inc on August 23, 2024 and sell it today you would earn a total of 21,792 from holding Kadant Inc or generate 114.39% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Enpro Industries vs. Kadant Inc
Performance |
| Timeline |
| Enpro Industries |
| Kadant Inc |
Enpro Industries and Kadant Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Enpro Industries and Kadant
The main advantage of trading using opposite Enpro Industries and Kadant positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Enpro Industries 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.| Enpro Industries vs. Helios Technologies | Enpro Industries vs. Omega Flex | Enpro Industries vs. Luxfer Holdings PLC | Enpro Industries vs. Hurco Companies |
| Kadant vs. Small Cap Core | Kadant vs. Freedom Holding Corp | Kadant vs. Gfl Environmental Holdings | Kadant vs. Growth Fund Of |
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 Headlines Timeline module to stay connected to all market stories and filter out noise. Drill down to analyze hype elasticity.
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