Correlation Between MasterBrand and Kimball International

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

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

Diversification Opportunities for MasterBrand and Kimball International

0.33

Correlation Coefficient

MasterBrand  Kimball International

Weak diversification

The 3 months correlation between MasterBrand and Kimball is 0.33. Overlapping area represents the amount of risk that can be diversified away by holding MasterBrand and Kimball International in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Kimball International and MasterBrand 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 MasterBrand are associated (or correlated) with Kimball International. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Kimball International has no effect on the direction of MasterBrand i.e., MasterBrand and Kimball International go up and down completely randomly.

Pair Corralation between MasterBrand and Kimball International

If you would invest  1,553  in MasterBrand on September 3, 2024 and sell it today you would earn a total of  177.00  from holding MasterBrand or generate 11.4% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	1.56%
Values	Daily Returns

MasterBrand  vs.  Kimball International

MasterBrand

Risk-Adjusted Performance

7 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in MasterBrand are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. In spite of rather uncertain fundamental drivers, MasterBrand may actually be approaching a critical reversion point that can send shares even higher in January 2025.

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.

Pair Trading with MasterBrand and Kimball International

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

The idea behind MasterBrand and Kimball International 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 Idea Breakdown module to analyze constituents of all Macroaxis ideas. Macroaxis investment ideas are predefined, sector-focused investing themes.