Correlation Between Tractor Supply and KB Financial
Can any of the company-specific risk be diversified away by investing in both Tractor Supply and KB 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 Tractor Supply and KB Financial into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Tractor Supply and KB Financial Group, you can compare the effects of market volatilities on Tractor Supply and KB 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 Tractor Supply with a short position of KB Financial. Check out your portfolio center. Please also check ongoing floating volatility patterns of Tractor Supply and KB Financial.
Diversification Opportunities for Tractor Supply and KB Financial
-0.35 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Tractor and K1BF34 is -0.35. Overlapping area represents the amount of risk that can be diversified away by holding Tractor Supply and KB Financial Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on KB Financial Group and Tractor Supply 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 Tractor Supply are associated (or correlated) with KB Financial. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of KB Financial Group has no effect on the direction of Tractor Supply i.e., Tractor Supply and KB Financial go up and down completely randomly.
Pair Corralation between Tractor Supply and KB Financial
Assuming the 90 days trading horizon Tractor Supply is expected to generate 0.99 times more return on investment than KB Financial. However, Tractor Supply is 1.01 times less risky than KB Financial. It trades about 0.11 of its potential returns per unit of risk. KB Financial Group is currently generating about -0.02 per unit of risk. If you would invest 1,685 in Tractor Supply on October 26, 2024 and sell it today you would earn a total of 201.00 from holding Tractor Supply or generate 11.93% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Against |
Strength | Insignificant |
Accuracy | 100.0% |
Values | Daily Returns |
Tractor Supply vs. KB Financial Group
Performance |
Timeline |
Tractor Supply |
KB Financial Group |
Tractor Supply and KB Financial Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Tractor Supply and KB Financial
The main advantage of trading using opposite Tractor Supply and KB Financial positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Tractor Supply position performs unexpectedly, KB 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 KB Financial will offset losses from the drop in KB Financial's long position.Tractor Supply vs. Zebra Technologies | ||
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Check out your portfolio center.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 Instant Ratings module to determine any equity ratings based on digital recommendations. Macroaxis instant equity ratings are based on combination of fundamental analysis and risk-adjusted market performance.
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