Correlation Between Kimball Electronics and Juniper Networks

Can any of the company-specific risk be diversified away by investing in both Kimball Electronics and Juniper Networks 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 Kimball Electronics and Juniper Networks into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Kimball Electronics and Juniper Networks, you can compare the effects of market volatilities on Kimball Electronics and Juniper Networks 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 Kimball Electronics with a short position of Juniper Networks. Check out your portfolio center. Please also check ongoing floating volatility patterns of Kimball Electronics and Juniper Networks.

Diversification Opportunities for Kimball Electronics and Juniper Networks

-0.45

Correlation Coefficient

Kimball Electronics  Juniper Networks

Very good diversification

The 3 months correlation between Kimball and Juniper is -0.45. Overlapping area represents the amount of risk that can be diversified away by holding Kimball Electronics and Juniper Networks in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Juniper Networks and Kimball Electronics 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 Kimball Electronics are associated (or correlated) with Juniper Networks. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Juniper Networks has no effect on the direction of Kimball Electronics i.e., Kimball Electronics and Juniper Networks go up and down completely randomly.

Pair Corralation between Kimball Electronics and Juniper Networks

Allowing for the 90-day total investment horizon Kimball Electronics is expected to under-perform the Juniper Networks. In addition to that, Kimball Electronics is 3.11 times more volatile than Juniper Networks. It trades about -0.04 of its total potential returns per unit of risk. Juniper Networks is currently generating about 0.05 per unit of volatility. If you would invest  3,603  in Juniper Networks on September 26, 2024 and sell it today you would earn a total of  147.00  from holding Juniper Networks or generate 4.08% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	100.0%
Values	Daily Returns

Kimball Electronics  vs.  Juniper Networks

Kimball Electronics

Risk-Adjusted Performance

3 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Kimball Electronics are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. In spite of rather uncertain technical and fundamental indicators, Kimball Electronics may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Juniper Networks

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Juniper Networks has generated negative risk-adjusted returns adding no value to investors with long positions. Even with relatively invariable basic indicators, Juniper Networks is not utilizing all of its potentials. The recent stock price agitation, may contribute to short-term losses for the retail investors.

Pair Trading with Kimball Electronics and Juniper Networks

The main advantage of trading using opposite Kimball Electronics and Juniper Networks positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Kimball Electronics position performs unexpectedly, Juniper Networks 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 Juniper Networks will offset losses from the drop in Juniper Networks' long position.

The idea behind Kimball Electronics and Juniper Networks 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.

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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 Price Transformation module to use Price Transformation models to analyze the depth of different equity instruments across global markets.