Correlation Between American Woodmark and Kimball International

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

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

Diversification Opportunities for American Woodmark and Kimball International

0.2

Correlation Coefficient

American Woodmark  Kimball International

Modest diversification

The 3 months correlation between American and Kimball is 0.2. Overlapping area represents the amount of risk that can be diversified away by holding American Woodmark and Kimball International in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Kimball International and American Woodmark 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 American Woodmark are associated (or correlated) with Kimball International. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Kimball International has no effect on the direction of American Woodmark i.e., American Woodmark and Kimball International go up and down completely randomly.

Pair Corralation between American Woodmark and Kimball International

If you would invest  8,351  in American Woodmark on August 31, 2024 and sell it today you would earn a total of  568.00  from holding American Woodmark or generate 6.8% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	1.59%
Values	Daily Returns

American Woodmark  vs.  Kimball International

American Woodmark

Risk-Adjusted Performance

4 of 100

Very Weak

Compared to the overall equity markets, risk-adjusted returns on investments in American Woodmark are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. In spite of rather conflicting basic indicators, American Woodmark may actually be approaching a critical reversion point that can send shares even higher in December 2024.

Kimball International

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Kimball International has generated negative risk-adjusted returns adding no value to investors with long positions. Despite quite persistent basic indicators, Kimball International is not utilizing all of its potentials. The latest stock price mess, may contribute to short-term losses for the institutional investors.

Pair Trading with American Woodmark and Kimball International

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

The idea behind American Woodmark and Kimball International 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 Global Markets Map module to get a quick overview of global market snapshot using zoomable world map. Drill down to check world indexes.