Correlation Between John Bean and Kornit Digital

Can any of the company-specific risk be diversified away by investing in both John Bean and Kornit Digital 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 John Bean and Kornit Digital into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between John Bean Technologies and Kornit Digital, you can compare the effects of market volatilities on John Bean and Kornit Digital 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 John Bean with a short position of Kornit Digital. Check out your portfolio center. Please also check ongoing floating volatility patterns of John Bean and Kornit Digital.

Diversification Opportunities for John Bean and Kornit Digital

0.69

Correlation Coefficient

John Bean  Kornit Digital

Poor diversification

The 3 months correlation between John and Kornit is 0.69. Overlapping area represents the amount of risk that can be diversified away by holding John Bean Technologies and Kornit Digital in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Kornit Digital and John Bean 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 John Bean Technologies are associated (or correlated) with Kornit Digital. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Kornit Digital has no effect on the direction of John Bean i.e., John Bean and Kornit Digital go up and down completely randomly.

Pair Corralation between John Bean and Kornit Digital

Considering the 90-day investment horizon John Bean is expected to generate 2.93 times less return on investment than Kornit Digital. But when comparing it to its historical volatility, John Bean Technologies is 2.02 times less risky than Kornit Digital. It trades about 0.12 of its potential returns per unit of risk. Kornit Digital is currently generating about 0.17 of returns per unit of risk over similar time horizon. If you would invest  2,423  in Kornit Digital on October 6, 2024 and sell it today you would earn a total of  650.00  from holding Kornit Digital or generate 26.83% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	97.62%
Values	Daily Returns

John Bean Technologies  vs.  Kornit Digital

John Bean Technologies

Risk-Adjusted Performance

10 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in John Bean Technologies are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively uncertain fundamental drivers, John Bean unveiled solid returns over the last few months and may actually be approaching a breakup point.

Kornit Digital

Risk-Adjusted Performance

8 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Kornit Digital are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively unsteady basic indicators, Kornit Digital unveiled solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with John Bean and Kornit Digital

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

The idea behind John Bean Technologies and Kornit Digital 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 Portfolio Center module to all portfolio management and optimization tools to improve performance of your portfolios.