Correlation Between Texas Instruments and Kimball Electronics
Can any of the company-specific risk be diversified away by investing in both Texas Instruments 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 Texas Instruments and Kimball Electronics into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Texas Instruments Incorporated and Kimball Electronics, you can compare the effects of market volatilities on Texas Instruments 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 Texas Instruments with a short position of Kimball Electronics. Check out your portfolio center. Please also check ongoing floating volatility patterns of Texas Instruments and Kimball Electronics.
Diversification Opportunities for Texas Instruments and Kimball Electronics
-0.17 | Correlation Coefficient |
Good diversification
The 3 months correlation between Texas and Kimball is -0.17. Overlapping area represents the amount of risk that can be diversified away by holding Texas Instruments Incorporated and Kimball Electronics in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Kimball Electronics and Texas Instruments 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 Texas Instruments Incorporated 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 Texas Instruments i.e., Texas Instruments and Kimball Electronics go up and down completely randomly.
Pair Corralation between Texas Instruments and Kimball Electronics
Considering the 90-day investment horizon Texas Instruments Incorporated is expected to under-perform the Kimball Electronics. But the stock apears to be less risky and, when comparing its historical volatility, Texas Instruments Incorporated is 1.03 times less risky than Kimball Electronics. The stock trades about -0.05 of its potential returns per unit of risk. The Kimball Electronics is currently generating about 0.08 of returns per unit of risk over similar time horizon. If you would invest 2,008 in Kimball Electronics on January 17, 2024 and sell it today you would earn a total of 54.00 from holding Kimball Electronics or generate 2.69% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 95.24% |
| Values | Daily Returns |
Texas Instruments Incorporated vs. Kimball Electronics
Performance |
| Timeline |
| Texas Instruments |
| Kimball Electronics |
Texas Instruments and Kimball Electronics Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Texas Instruments and Kimball Electronics
The main advantage of trading using opposite Texas Instruments and Kimball Electronics positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Texas Instruments 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.The idea behind Texas Instruments Incorporated and Kimball Electronics pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.| Kimball Electronics vs. Hayward Holdings | Kimball Electronics vs. Hollysys Automation Technologies | Kimball Electronics vs. Enersys | Kimball Electronics vs. Espey Mfg Electronics |
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 Stocks Directory module to find actively traded stocks across global markets.
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