Correlation Between VerifyMe and Kimball Electronics
Can any of the company-specific risk be diversified away by investing in both VerifyMe and Kimball Electronics 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 VerifyMe and Kimball Electronics into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between VerifyMe and Kimball Electronics, you can compare the effects of market volatilities on VerifyMe and Kimball Electronics 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 VerifyMe with a short position of Kimball Electronics. Check out your portfolio center. Please also check ongoing floating volatility patterns of VerifyMe and Kimball Electronics.
Diversification Opportunities for VerifyMe and Kimball Electronics
-0.62 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between VerifyMe and Kimball is -0.62. Overlapping area represents the amount of risk that can be diversified away by holding VerifyMe and Kimball Electronics in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Kimball Electronics and VerifyMe 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 VerifyMe are associated (or correlated) with Kimball Electronics. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Kimball Electronics has no effect on the direction of VerifyMe i.e., VerifyMe and Kimball Electronics go up and down completely randomly.
Pair Corralation between VerifyMe and Kimball Electronics
Given the investment horizon of 90 days VerifyMe is expected to under-perform the Kimball Electronics. In addition to that, VerifyMe is 2.89 times more volatile than Kimball Electronics. It trades about -0.14 of its total potential returns per unit of risk. Kimball Electronics is currently generating about 0.08 per unit of volatility. If you would invest 1,731 in Kimball Electronics on September 7, 2024 and sell it today you would earn a total of 186.00 from holding Kimball Electronics or generate 10.75% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Against |
Strength | Weak |
Accuracy | 100.0% |
Values | Daily Returns |
VerifyMe vs. Kimball Electronics
Performance |
Timeline |
VerifyMe |
Kimball Electronics |
VerifyMe and Kimball Electronics Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with VerifyMe and Kimball Electronics
The main advantage of trading using opposite VerifyMe and Kimball Electronics positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if VerifyMe position performs unexpectedly, Kimball Electronics 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 Electronics will offset losses from the drop in Kimball Electronics' long position.The idea behind VerifyMe and Kimball Electronics 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.Kimball Electronics vs. Hayward Holdings | Kimball Electronics vs. Enersys | Kimball Electronics vs. Espey Mfg Electronics | Kimball Electronics vs. Advanced Energy Industries |
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 Pair Correlation module to compare performance and examine fundamental relationship between any two equity instruments.
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