Correlation Between XAAR PLC and KENNAMETAL INC
Can any of the company-specific risk be diversified away by investing in both XAAR PLC 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 XAAR PLC and KENNAMETAL INC into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between XAAR PLC LS 10 and KENNAMETAL INC, you can compare the effects of market volatilities on XAAR PLC 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 XAAR PLC with a short position of KENNAMETAL INC. Check out your portfolio center. Please also check ongoing floating volatility patterns of XAAR PLC and KENNAMETAL INC.
Diversification Opportunities for XAAR PLC and KENNAMETAL INC
-0.76 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between XAAR and KENNAMETAL is -0.76. Overlapping area represents the amount of risk that can be diversified away by holding XAAR PLC LS 10 and KENNAMETAL INC in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on KENNAMETAL INC and XAAR PLC 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 XAAR PLC LS 10 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 XAAR PLC i.e., XAAR PLC and KENNAMETAL INC go up and down completely randomly.
Pair Corralation between XAAR PLC and KENNAMETAL INC
Assuming the 90 days horizon XAAR PLC LS 10 is expected to under-perform the KENNAMETAL INC. In addition to that, XAAR PLC is 1.79 times more volatile than KENNAMETAL INC. It trades about -0.06 of its total potential returns per unit of risk. KENNAMETAL INC is currently generating about 0.07 per unit of volatility. If you would invest 2,031 in KENNAMETAL INC on August 25, 2024 and sell it today you would earn a total of 709.00 from holding KENNAMETAL INC or generate 34.91% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
XAAR PLC LS 10 vs. KENNAMETAL INC
Performance |
| Timeline |
| XAAR PLC LS |
| KENNAMETAL INC |
XAAR PLC and KENNAMETAL INC Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with XAAR PLC and KENNAMETAL INC
The main advantage of trading using opposite XAAR PLC and KENNAMETAL INC positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if XAAR PLC 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.| XAAR PLC vs. KENNAMETAL INC | XAAR PLC vs. CHINA TONTINE WINES | XAAR PLC vs. Perseus Mining Limited | XAAR PLC vs. Zijin Mining Group |
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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 Bonds Directory module to find actively traded corporate debentures issued by US companies.
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