Correlation Between NYSE Composite and Kimball Electronics
Can any of the company-specific risk be diversified away by investing in both NYSE Composite 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 NYSE Composite and Kimball Electronics into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between NYSE Composite and Kimball Electronics, you can compare the effects of market volatilities on NYSE Composite 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 NYSE Composite with a short position of Kimball Electronics. Check out your portfolio center. Please also check ongoing floating volatility patterns of NYSE Composite and Kimball Electronics.
Diversification Opportunities for NYSE Composite and Kimball Electronics
-0.3 | Correlation Coefficient |
Very good diversification
The 3 months correlation between NYSE and Kimball is -0.3. Overlapping area represents the amount of risk that can be diversified away by holding NYSE Composite and Kimball Electronics in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Kimball Electronics and NYSE Composite 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 NYSE Composite 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 NYSE Composite i.e., NYSE Composite and Kimball Electronics go up and down completely randomly.
Pair Corralation between NYSE Composite and Kimball Electronics
Assuming the 90 days trading horizon NYSE Composite is expected to under-perform the Kimball Electronics. But the index apears to be less risky and, when comparing its historical volatility, NYSE Composite is 2.34 times less risky than Kimball Electronics. The index trades about -0.12 of its potential returns per unit of risk. The Kimball Electronics is currently generating about 0.11 of returns per unit of risk over similar time horizon. If you would invest 2,112 in Kimball Electronics on February 5, 2024 and sell it today you would earn a total of 77.00 from holding Kimball Electronics or generate 3.65% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Against |
Strength | Insignificant |
Accuracy | 100.0% |
Values | Daily Returns |
NYSE Composite vs. Kimball Electronics
Performance |
Timeline |
NYSE Composite and Kimball Electronics Volatility Contrast
Predicted Return Density |
Returns |
NYSE Composite
Pair trading matchups for NYSE Composite
Kimball Electronics
Pair trading matchups for Kimball Electronics
Pair Trading with NYSE Composite and Kimball Electronics
The main advantage of trading using opposite NYSE Composite and Kimball Electronics positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if NYSE Composite 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.NYSE Composite vs. Bridgford Foods | NYSE Composite vs. SunOpta | NYSE Composite vs. Where Food Comes | NYSE Composite vs. Sligro Food 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 Risk-Return Analysis module to view associations between returns expected from investment and the risk you assume.
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