Correlation Between NVent Electric and Kimball Electronics
Can any of the company-specific risk be diversified away by investing in both NVent Electric 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 NVent Electric and Kimball Electronics into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between nVent Electric PLC and Kimball Electronics, you can compare the effects of market volatilities on NVent Electric 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 NVent Electric with a short position of Kimball Electronics. Check out your portfolio center. Please also check ongoing floating volatility patterns of NVent Electric and Kimball Electronics.
Diversification Opportunities for NVent Electric and Kimball Electronics
0.76 | Correlation Coefficient |
Poor diversification
The 3 months correlation between NVent and Kimball is 0.76. Overlapping area represents the amount of risk that can be diversified away by holding nVent Electric PLC and Kimball Electronics in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Kimball Electronics and NVent Electric 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 nVent Electric PLC 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 NVent Electric i.e., NVent Electric and Kimball Electronics go up and down completely randomly.
Pair Corralation between NVent Electric and Kimball Electronics
Considering the 90-day investment horizon nVent Electric PLC is expected to generate 2.09 times more return on investment than Kimball Electronics. However, NVent Electric is 2.09 times more volatile than Kimball Electronics. It trades about -0.05 of its potential returns per unit of risk. Kimball Electronics is currently generating about -0.14 per unit of risk. If you would invest 6,965 in nVent Electric PLC on November 9, 2024 and sell it today you would lose (384.00) from holding nVent Electric PLC or give up 5.51% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 95.24% |
| Values | Daily Returns |
nVent Electric PLC vs. Kimball Electronics
Performance |
| Timeline |
| nVent Electric PLC |
| Kimball Electronics |
NVent Electric and Kimball Electronics Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with NVent Electric and Kimball Electronics
The main advantage of trading using opposite NVent Electric and Kimball Electronics positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if NVent Electric 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' long position.| NVent Electric vs. Hubbell | NVent Electric vs. Advanced Energy Industries | NVent Electric vs. Vertiv Holdings Co | NVent Electric vs. Energizer Holdings |
| Kimball Electronics vs. Hayward Holdings | Kimball Electronics vs. Enersys | Kimball Electronics vs. Espey Mfg Electronics | Kimball Electronics vs. Advanced Energy Industries |
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 Theme Ratings module to determine theme ratings based on digital equity recommendations. Macroaxis theme ratings are based on combination of fundamental analysis and risk-adjusted market performance.
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