Correlation Between Powell Industries and Kimball Electronics
Can any of the company-specific risk be diversified away by investing in both Powell Industries 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 Powell Industries and Kimball Electronics into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Powell Industries and Kimball Electronics, you can compare the effects of market volatilities on Powell Industries 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 Powell Industries with a short position of Kimball Electronics. Check out your portfolio center. Please also check ongoing floating volatility patterns of Powell Industries and Kimball Electronics.
Diversification Opportunities for Powell Industries and Kimball Electronics
0.8 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Powell and Kimball is 0.8. Overlapping area represents the amount of risk that can be diversified away by holding Powell Industries and Kimball Electronics in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Kimball Electronics and Powell 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 Powell Industries 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 Powell Industries i.e., Powell Industries and Kimball Electronics go up and down completely randomly.
Pair Corralation between Powell Industries and Kimball Electronics
Given the investment horizon of 90 days Powell Industries is expected to generate 3.78 times more return on investment than Kimball Electronics. However, Powell Industries is 3.78 times more volatile than Kimball Electronics. It trades about 0.1 of its potential returns per unit of risk. Kimball Electronics is currently generating about -0.07 per unit of risk. If you would invest 22,165 in Powell Industries on November 1, 2024 and sell it today you would earn a total of 1,885 from holding Powell Industries or generate 8.5% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Powell Industries vs. Kimball Electronics
Performance |
| Timeline |
| Powell Industries |
| Kimball Electronics |
Powell Industries and Kimball Electronics Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Powell Industries and Kimball Electronics
The main advantage of trading using opposite Powell Industries and Kimball Electronics positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Powell Industries 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.| Powell Industries vs. Kimball Electronics | Powell Industries vs. Hayward Holdings | Powell Industries vs. nVent Electric PLC | Powell Industries vs. Energizer Holdings |
| Kimball Electronics vs. Rigetti Computing | Kimball Electronics vs. IONQ WT | Kimball Electronics vs. Arqit Quantum Warrants | Kimball Electronics vs. QBTS WT |
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 Sign In To Macroaxis module to sign in to explore Macroaxis' wealth optimization platform and fintech modules.
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