Correlation Between KinderCare Learning and Kingsway Financial

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

By analyzing existing cross correlation between KinderCare Learning Companies, and Kingsway Financial Services, you can compare the effects of market volatilities on KinderCare Learning and Kingsway Financial 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 KinderCare Learning with a short position of Kingsway Financial. Check out your portfolio center. Please also check ongoing floating volatility patterns of KinderCare Learning and Kingsway Financial.

Diversification Opportunities for KinderCare Learning and Kingsway Financial

0.85

Correlation Coefficient

KinderCare Learning  Kingsway Financial

Very poor diversification

The 3 months correlation between KinderCare and Kingsway is 0.85. Overlapping area represents the amount of risk that can be diversified away by holding KinderCare Learning Companies, and Kingsway Financial Services in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Kingsway Financial and KinderCare Learning 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 KinderCare Learning Companies, are associated (or correlated) with Kingsway Financial. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Kingsway Financial has no effect on the direction of KinderCare Learning i.e., KinderCare Learning and Kingsway Financial go up and down completely randomly.

Pair Corralation between KinderCare Learning and Kingsway Financial

Considering the 90-day investment horizon KinderCare Learning Companies, is expected to generate 2.41 times more return on investment than Kingsway Financial. However, KinderCare Learning is 2.41 times more volatile than Kingsway Financial Services. It trades about 0.31 of its potential returns per unit of risk. Kingsway Financial Services is currently generating about -0.29 per unit of risk. If you would invest  1,806  in KinderCare Learning Companies, on October 25, 2024 and sell it today you would earn a total of  294.00  from holding KinderCare Learning Companies, or generate 16.28% return on investment over 90 days.

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

KinderCare Learning Companies,  vs.  Kingsway Financial Services

KinderCare Learning

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days KinderCare Learning Companies, has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of weak performance in the last few months, the Stock's essential indicators remain rather sound which may send shares a bit higher in February 2025. The latest tumult may also be a sign of longer-term up-swing for the firm shareholders.

Kingsway Financial

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Kingsway Financial Services has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest fragile performance, the Stock's technical and fundamental indicators remain stable and the newest uproar on Wall Street may also be a sign of mid-term gains for the firm private investors.

Pair Trading with KinderCare Learning and Kingsway Financial

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

The idea behind KinderCare Learning Companies, and Kingsway Financial Services 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 Funds Screener module to find actively-traded funds from around the world traded on over 30 global exchanges.