Correlation Between JDS UNIPHASE and KENNAMETAL INC
Can any of the company-specific risk be diversified away by investing in both JDS UNIPHASE and KENNAMETAL INC 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 JDS UNIPHASE and KENNAMETAL INC into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between JDS UNIPHASE and KENNAMETAL INC, you can compare the effects of market volatilities on JDS UNIPHASE and KENNAMETAL INC 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 JDS UNIPHASE with a short position of KENNAMETAL INC. Check out your portfolio center. Please also check ongoing floating volatility patterns of JDS UNIPHASE and KENNAMETAL INC.
Diversification Opportunities for JDS UNIPHASE and KENNAMETAL INC
0.89 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between JDS and KENNAMETAL is 0.89. Overlapping area represents the amount of risk that can be diversified away by holding JDS UNIPHASE and KENNAMETAL INC in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on KENNAMETAL INC and JDS UNIPHASE 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 JDS UNIPHASE are associated (or correlated) with KENNAMETAL INC. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of KENNAMETAL INC has no effect on the direction of JDS UNIPHASE i.e., JDS UNIPHASE and KENNAMETAL INC go up and down completely randomly.
Pair Corralation between JDS UNIPHASE and KENNAMETAL INC
Assuming the 90 days trading horizon JDS UNIPHASE is expected to generate about the same return on investment as KENNAMETAL INC. However, JDS UNIPHASE is 1.29 times more volatile than KENNAMETAL INC. It trades about 0.02 of its potential returns per unit of risk. KENNAMETAL INC is currently producing about 0.03 per unit of risk. If you would invest 2,318 in KENNAMETAL INC on September 12, 2024 and sell it today you would earn a total of 262.00 from holding KENNAMETAL INC or generate 11.3% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
JDS UNIPHASE vs. KENNAMETAL INC
Performance |
| Timeline |
| JDS UNIPHASE |
| KENNAMETAL INC |
JDS UNIPHASE and KENNAMETAL INC Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with JDS UNIPHASE and KENNAMETAL INC
The main advantage of trading using opposite JDS UNIPHASE and KENNAMETAL INC positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if JDS UNIPHASE position performs unexpectedly, KENNAMETAL INC 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 KENNAMETAL INC will offset losses from the drop in KENNAMETAL INC's long position.| JDS UNIPHASE vs. Zijin Mining Group | JDS UNIPHASE vs. Ross Stores | JDS UNIPHASE vs. AEON STORES | JDS UNIPHASE vs. KENNAMETAL INC |
| KENNAMETAL INC vs. Apple Inc | KENNAMETAL INC vs. Apple Inc | KENNAMETAL INC vs. Apple Inc | KENNAMETAL INC vs. Apple Inc |
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 Fundamental Analysis module to view fundamental data based on most recent published financial statements.
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