Correlation Between KIMBALL ELECTRONICS and National Bank

Can any of the company-specific risk be diversified away by investing in both KIMBALL ELECTRONICS and National Bank 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 National Bank into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between KIMBALL ELECTRONICS and National Bank Holdings, you can compare the effects of market volatilities on KIMBALL ELECTRONICS and National Bank 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 National Bank. Check out your portfolio center. Please also check ongoing floating volatility patterns of KIMBALL ELECTRONICS and National Bank.

Diversification Opportunities for KIMBALL ELECTRONICS and National Bank

0.89

Correlation Coefficient

KIMBALL ELECTRONICS  National Bank

Very poor diversification

The 3 months correlation between KIMBALL and National is 0.89. Overlapping area represents the amount of risk that can be diversified away by holding KIMBALL ELECTRONICS and National Bank Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on National Bank Holdings 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 National Bank. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of National Bank Holdings has no effect on the direction of KIMBALL ELECTRONICS i.e., KIMBALL ELECTRONICS and National Bank go up and down completely randomly.

Pair Corralation between KIMBALL ELECTRONICS and National Bank

Assuming the 90 days horizon KIMBALL ELECTRONICS is expected to generate 0.79 times more return on investment than National Bank. However, KIMBALL ELECTRONICS is 1.26 times less risky than National Bank. It trades about -0.03 of its potential returns per unit of risk. National Bank Holdings is currently generating about -0.25 per unit of risk. If you would invest  1,790  in KIMBALL ELECTRONICS on October 8, 2024 and sell it today you would lose (20.00) from holding KIMBALL ELECTRONICS or give up 1.12% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Strong
Accuracy	100.0%
Values	Daily Returns

KIMBALL ELECTRONICS  vs.  National Bank Holdings

KIMBALL ELECTRONICS

Risk-Adjusted Performance

6 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in KIMBALL ELECTRONICS are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, KIMBALL ELECTRONICS reported solid returns over the last few months and may actually be approaching a breakup point.

National Bank Holdings

Risk-Adjusted Performance

5 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in National Bank Holdings are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. Despite nearly uncertain basic indicators, National Bank reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with KIMBALL ELECTRONICS and National Bank

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

The idea behind KIMBALL ELECTRONICS and National Bank Holdings 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.

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.