Correlation Between Kimball International and Purple Innovation

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

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

Diversification Opportunities for Kimball International and Purple Innovation

-0.57

Correlation Coefficient

Kimball International  Purple Innovation

Excellent diversification

The 3 months correlation between Kimball and Purple is -0.57. Overlapping area represents the amount of risk that can be diversified away by holding Kimball International and Purple Innovation in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Purple Innovation and Kimball International 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 International are associated (or correlated) with Purple Innovation. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Purple Innovation has no effect on the direction of Kimball International i.e., Kimball International and Purple Innovation go up and down completely randomly.

Pair Corralation between Kimball International and Purple Innovation

If you would invest  1,230  in Kimball International on September 1, 2024 and sell it today you would earn a total of  0.00  from holding Kimball International or generate 0.0% return on investment over 90 days.

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

Kimball International  vs.  Purple Innovation

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.

Purple Innovation

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Purple Innovation has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest inconsistent performance, the Stock's basic indicators remain persistent and the latest mess on Wall Street may also be a sign of long-standing gains for the company institutional investors.

Pair Trading with Kimball International and Purple Innovation

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

The idea behind Kimball International and Purple Innovation 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 Aroon Oscillator module to analyze current equity momentum using Aroon Oscillator and other momentum ratios.