Correlation Between Kadant and John Bean

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

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

Diversification Opportunities for Kadant and John Bean

0.68

Correlation Coefficient

Kadant  John Bean

Poor diversification

The 3 months correlation between Kadant and John is 0.68. Overlapping area represents the amount of risk that can be diversified away by holding Kadant Inc and John Bean Technologies in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on John Bean Technologies and Kadant 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 Kadant Inc are associated (or correlated) with John Bean. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of John Bean Technologies has no effect on the direction of Kadant i.e., Kadant and John Bean go up and down completely randomly.

Pair Corralation between Kadant and John Bean

Considering the 90-day investment horizon Kadant is expected to generate 5.75 times less return on investment than John Bean. But when comparing it to its historical volatility, Kadant Inc is 1.47 times less risky than John Bean. It trades about 0.04 of its potential returns per unit of risk. John Bean Technologies is currently generating about 0.15 of returns per unit of risk over similar time horizon. If you would invest  9,843  in John Bean Technologies on September 30, 2024 and sell it today you would earn a total of  2,995  from holding John Bean Technologies or generate 30.43% return on investment over 90 days.

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

Kadant Inc  vs.  John Bean Technologies

Kadant Inc

Risk-Adjusted Performance

3 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Kadant Inc are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. Despite fairly strong basic indicators, Kadant is not utilizing all of its potentials. The latest stock price confusion, may contribute to short-horizon losses for the traders.

John Bean Technologies

Risk-Adjusted Performance

12 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in John Bean Technologies are ranked lower than 12 (%) 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.

Pair Trading with Kadant and John Bean

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

The idea behind Kadant Inc and John Bean Technologies 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 Analyst Advice module to analyst recommendations and target price estimates broken down by several categories.