Correlation Between Kbi Global and Jennison Natural
Can any of the company-specific risk be diversified away by investing in both Kbi Global and Jennison Natural 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 Kbi Global and Jennison Natural into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Kbi Global Investors and Jennison Natural Resources, you can compare the effects of market volatilities on Kbi Global and Jennison Natural 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 Kbi Global with a short position of Jennison Natural. Check out your portfolio center. Please also check ongoing floating volatility patterns of Kbi Global and Jennison Natural.
Diversification Opportunities for Kbi Global and Jennison Natural
0.64 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Kbi and Jennison is 0.64. Overlapping area represents the amount of risk that can be diversified away by holding Kbi Global Investors and Jennison Natural Resources in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Jennison Natural Res and Kbi Global 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 Kbi Global Investors are associated (or correlated) with Jennison Natural. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Jennison Natural Res has no effect on the direction of Kbi Global i.e., Kbi Global and Jennison Natural go up and down completely randomly.
Pair Corralation between Kbi Global and Jennison Natural
Assuming the 90 days horizon Kbi Global Investors is expected to generate 0.56 times more return on investment than Jennison Natural. However, Kbi Global Investors is 1.79 times less risky than Jennison Natural. It trades about 0.48 of its potential returns per unit of risk. Jennison Natural Resources is currently generating about 0.07 per unit of risk. If you would invest 1,208 in Kbi Global Investors on February 13, 2024 and sell it today you would earn a total of 84.00 from holding Kbi Global Investors or generate 6.95% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Kbi Global Investors vs. Jennison Natural Resources
Performance |
| Timeline |
| Kbi Global Investors |
| Jennison Natural Res |
Kbi Global and Jennison Natural Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Kbi Global and Jennison Natural
The main advantage of trading using opposite Kbi Global and Jennison Natural positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Kbi Global position performs unexpectedly, Jennison Natural 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 Jennison Natural will offset losses from the drop in Jennison Natural's long position.| Kbi Global vs. Barloworld Ltd ADR | Kbi Global vs. Morningstar Unconstrained Allocation | Kbi Global vs. Via Renewables | Kbi Global vs. Jpmorgan Equity Index |
| Jennison Natural vs. Barloworld Ltd ADR | Jennison Natural vs. Morningstar Unconstrained Allocation | Jennison Natural vs. Via Renewables | Jennison Natural vs. Jpmorgan Equity Index |
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 Cryptocurrency Center module to build and monitor diversified portfolio of extremely risky digital assets and cryptocurrency.
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