Correlation Between Rockwell Automation and Kone Oyj
Can any of the company-specific risk be diversified away by investing in both Rockwell Automation and Kone Oyj 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 Rockwell Automation and Kone Oyj into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Rockwell Automation and Kone Oyj ADR, you can compare the effects of market volatilities on Rockwell Automation and Kone Oyj 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 Rockwell Automation with a short position of Kone Oyj. Check out your portfolio center. Please also check ongoing floating volatility patterns of Rockwell Automation and Kone Oyj.
Diversification Opportunities for Rockwell Automation and Kone Oyj
-0.3 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Rockwell and Kone is -0.3. Overlapping area represents the amount of risk that can be diversified away by holding Rockwell Automation and Kone Oyj ADR in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Kone Oyj ADR and Rockwell Automation 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 Rockwell Automation are associated (or correlated) with Kone Oyj. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Kone Oyj ADR has no effect on the direction of Rockwell Automation i.e., Rockwell Automation and Kone Oyj go up and down completely randomly.
Pair Corralation between Rockwell Automation and Kone Oyj
Considering the 90-day investment horizon Rockwell Automation is expected to generate 1.8 times more return on investment than Kone Oyj. However, Rockwell Automation is 1.8 times more volatile than Kone Oyj ADR. It trades about 0.15 of its potential returns per unit of risk. Kone Oyj ADR is currently generating about -0.24 per unit of risk. If you would invest 26,645 in Rockwell Automation on August 25, 2024 and sell it today you would earn a total of 2,441 from holding Rockwell Automation or generate 9.16% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Rockwell Automation vs. Kone Oyj ADR
Performance |
| Timeline |
| Rockwell Automation |
| Kone Oyj ADR |
Rockwell Automation and Kone Oyj Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Rockwell Automation and Kone Oyj
The main advantage of trading using opposite Rockwell Automation and Kone Oyj positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Rockwell Automation position performs unexpectedly, Kone Oyj 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 Kone Oyj will offset losses from the drop in Kone Oyj's long position.| Rockwell Automation vs. Dover | Rockwell Automation vs. Illinois Tool Works | Rockwell Automation vs. Ingersoll Rand | Rockwell Automation vs. Eaton PLC |
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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 Dashboard module to portfolio dashboard that provides centralized access to all your investments.
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