Correlation Between Purple Innovation and Kimball International

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

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

Diversification Opportunities for Purple Innovation and Kimball International

-0.57

Correlation Coefficient

Purple Innovation  Kimball International

Excellent diversification

The 3 months correlation between Purple and Kimball is -0.57. Overlapping area represents the amount of risk that can be diversified away by holding Purple Innovation and Kimball International in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Kimball International and Purple Innovation 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 Purple Innovation 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 Purple Innovation i.e., Purple Innovation and Kimball International go up and down completely randomly.

Pair Corralation between Purple Innovation and Kimball International

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

Purple Innovation  vs.  Kimball International

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.

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 Purple Innovation and Kimball International

The main advantage of trading using opposite Purple Innovation and Kimball International positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Purple Innovation 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 Purple Innovation 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 Portfolio Manager module to state of the art Portfolio Manager to monitor and improve performance of your invested capital.