Correlation Between Valvoline and Kingsway Financial
Can any of the company-specific risk be diversified away by investing in both Valvoline and Kingsway Financial 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 Valvoline and Kingsway Financial into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Valvoline and Kingsway Financial Services, you can compare the effects of market volatilities on Valvoline and Kingsway Financial 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 Valvoline with a short position of Kingsway Financial. Check out your portfolio center. Please also check ongoing floating volatility patterns of Valvoline and Kingsway Financial.
Diversification Opportunities for Valvoline and Kingsway Financial
0.83 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Valvoline and Kingsway is 0.83. Overlapping area represents the amount of risk that can be diversified away by holding Valvoline and Kingsway Financial Services in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Kingsway Financial and Valvoline 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 Valvoline are associated (or correlated) with Kingsway Financial. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Kingsway Financial has no effect on the direction of Valvoline i.e., Valvoline and Kingsway Financial go up and down completely randomly.
Pair Corralation between Valvoline and Kingsway Financial
Considering the 90-day investment horizon Valvoline is expected to generate 1.0 times more return on investment than Kingsway Financial. However, Valvoline is 1.0 times less risky than Kingsway Financial. It trades about 0.2 of its potential returns per unit of risk. Kingsway Financial Services is currently generating about 0.05 per unit of risk. If you would invest 3,541 in Valvoline on November 5, 2024 and sell it today you would earn a total of 170.00 from holding Valvoline or generate 4.8% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Valvoline vs. Kingsway Financial Services
Performance |
| Timeline |
| Valvoline |
| Kingsway Financial |
Valvoline and Kingsway Financial Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Valvoline and Kingsway Financial
The main advantage of trading using opposite Valvoline and Kingsway Financial positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Valvoline position performs unexpectedly, Kingsway Financial 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 Kingsway Financial will offset losses from the drop in Kingsway Financial's long position.| Valvoline vs. Cosan SA ADR | Valvoline vs. Delek Energy | Valvoline vs. Crossamerica Partners LP | Valvoline vs. Par Pacific Holdings |
| Kingsway Financial vs. CarGurus | Kingsway Financial vs. KAR Auction Services | Kingsway Financial vs. Driven Brands Holdings | Kingsway Financial vs. Group 1 Automotive |
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 Content Syndication module to quickly integrate customizable finance content to your own investment portal.
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