Correlation Between Caldwell Partners and K Bro

Can any of the company-specific risk be diversified away by investing in both Caldwell Partners and K Bro 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 Caldwell Partners and K Bro into the same portfolio, which is an essential part of the fundamental portfolio management process.

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

Diversification Opportunities for Caldwell Partners and K Bro

0.74

Correlation Coefficient

Caldwell Partners  K Bro

Poor diversification

The 3 months correlation between Caldwell and KBL is 0.74. Overlapping area represents the amount of risk that can be diversified away by holding Caldwell Partners Internationa and K Bro Linen in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on K Bro Linen and Caldwell Partners 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 Caldwell Partners International are associated (or correlated) with K Bro. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of K Bro Linen has no effect on the direction of Caldwell Partners i.e., Caldwell Partners and K Bro go up and down completely randomly.

Pair Corralation between Caldwell Partners and K Bro

Assuming the 90 days trading horizon Caldwell Partners International is expected to under-perform the K Bro. In addition to that, Caldwell Partners is 3.53 times more volatile than K Bro Linen. It trades about -0.09 of its total potential returns per unit of risk. K Bro Linen is currently generating about -0.1 per unit of volatility. If you would invest  3,695  in K Bro Linen on December 29, 2024 and sell it today you would lose (299.00) from holding K Bro Linen or give up 8.09% of portfolio value over 90 days.

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

Caldwell Partners Internationa  vs.  K Bro Linen

Caldwell Partners

Risk-Adjusted Performance

Very Weak

Over the last 90 days Caldwell Partners International has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of unfluctuating performance in the last few months, the Stock's essential indicators remain very healthy which may send shares a bit higher in April 2025. The recent disarray may also be a sign of long period up-swing for the firm investors.

K Bro Linen

Risk-Adjusted Performance

Very Weak

Over the last 90 days K Bro Linen has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest weak performance, the Stock's essential indicators remain healthy and the recent disarray on Wall Street may also be a sign of long period gains for the firm investors.

Pair Trading with Caldwell Partners and K Bro

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

The idea behind Caldwell Partners International and K Bro Linen 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 Portfolio Analyzer module to portfolio analysis module that provides access to portfolio diagnostics and optimization engine.