Correlation Between Richelieu Hardware and Kewaunee Scientific
Can any of the company-specific risk be diversified away by investing in both Richelieu Hardware and Kewaunee Scientific 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 Richelieu Hardware and Kewaunee Scientific into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Richelieu Hardware and Kewaunee Scientific, you can compare the effects of market volatilities on Richelieu Hardware and Kewaunee Scientific 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 Richelieu Hardware with a short position of Kewaunee Scientific. Check out your portfolio center. Please also check ongoing floating volatility patterns of Richelieu Hardware and Kewaunee Scientific.
Diversification Opportunities for Richelieu Hardware and Kewaunee Scientific
-0.37 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Richelieu and Kewaunee is -0.37. Overlapping area represents the amount of risk that can be diversified away by holding Richelieu Hardware and Kewaunee Scientific in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Kewaunee Scientific and Richelieu Hardware 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 Richelieu Hardware are associated (or correlated) with Kewaunee Scientific. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Kewaunee Scientific has no effect on the direction of Richelieu Hardware i.e., Richelieu Hardware and Kewaunee Scientific go up and down completely randomly.
Pair Corralation between Richelieu Hardware and Kewaunee Scientific
Assuming the 90 days horizon Richelieu Hardware is expected to generate 8.65 times less return on investment than Kewaunee Scientific. But when comparing it to its historical volatility, Richelieu Hardware is 7.83 times less risky than Kewaunee Scientific. It trades about 0.25 of its potential returns per unit of risk. Kewaunee Scientific is currently generating about 0.27 of returns per unit of risk over similar time horizon. If you would invest 3,809 in Kewaunee Scientific on September 15, 2024 and sell it today you would earn a total of 1,530 from holding Kewaunee Scientific or generate 40.17% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 95.45% |
| Values | Daily Returns |
Richelieu Hardware vs. Kewaunee Scientific
Performance |
| Timeline |
| Richelieu Hardware |
| Kewaunee Scientific |
Richelieu Hardware and Kewaunee Scientific Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Richelieu Hardware and Kewaunee Scientific
The main advantage of trading using opposite Richelieu Hardware and Kewaunee Scientific positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Richelieu Hardware position performs unexpectedly, Kewaunee Scientific 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 Kewaunee Scientific will offset losses from the drop in Kewaunee Scientific's long position.| Richelieu Hardware vs. Kewaunee Scientific | Richelieu Hardware vs. Hamilton Beach Brands | Richelieu Hardware vs. Mohawk Industries | Richelieu Hardware vs. Whirlpool |
| Kewaunee Scientific vs. Hamilton Beach Brands | Kewaunee Scientific vs. Mohawk Industries | Kewaunee Scientific vs. Whirlpool | Kewaunee Scientific vs. iRobot |
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 Portfolio Backtesting module to avoid under-diversification and over-optimization by backtesting your portfolios.
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