Correlation Between Viavi Solutions and Kimball Electronics
Can any of the company-specific risk be diversified away by investing in both Viavi Solutions 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 Viavi Solutions and Kimball Electronics into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Viavi Solutions and Kimball Electronics, you can compare the effects of market volatilities on Viavi Solutions 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 Viavi Solutions with a short position of Kimball Electronics. Check out your portfolio center. Please also check ongoing floating volatility patterns of Viavi Solutions and Kimball Electronics.
Diversification Opportunities for Viavi Solutions and Kimball Electronics
0.78 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Viavi and Kimball is 0.78. Overlapping area represents the amount of risk that can be diversified away by holding Viavi Solutions and Kimball Electronics in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Kimball Electronics and Viavi Solutions 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 Viavi Solutions 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 Viavi Solutions i.e., Viavi Solutions and Kimball Electronics go up and down completely randomly.
Pair Corralation between Viavi Solutions and Kimball Electronics
Given the investment horizon of 90 days Viavi Solutions is expected to generate 1.27 times less return on investment than Kimball Electronics. But when comparing it to its historical volatility, Viavi Solutions is 1.17 times less risky than Kimball Electronics. It trades about 0.13 of its potential returns per unit of risk. Kimball Electronics is currently generating about 0.14 of returns per unit of risk over similar time horizon. If you would invest 1,733 in Kimball Electronics on September 3, 2024 and sell it today you would earn a total of 228.00 from holding Kimball Electronics or generate 13.16% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Viavi Solutions vs. Kimball Electronics
Performance |
| Timeline |
| Viavi Solutions |
| Kimball Electronics |
Viavi Solutions and Kimball Electronics Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Viavi Solutions and Kimball Electronics
The main advantage of trading using opposite Viavi Solutions and Kimball Electronics positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Viavi Solutions 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.| Viavi Solutions vs. Ciena Corp | Viavi Solutions vs. Infinera | Viavi Solutions vs. Applied Opt | Viavi Solutions vs. Juniper Networks |
| 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 Watchlist Optimization module to optimize watchlists to build efficient portfolios or rebalance existing positions based on the mean-variance optimization algorithm.
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