Correlation Between Enersys and Kimball Electronics

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Can any of the company-specific risk be diversified away by investing in both Enersys 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 Enersys and Kimball Electronics into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Enersys and Kimball Electronics, you can compare the effects of market volatilities on Enersys 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 Enersys with a short position of Kimball Electronics. Check out your portfolio center. Please also check ongoing floating volatility patterns of Enersys and Kimball Electronics.

Diversification Opportunities for Enersys and Kimball Electronics

 0.55 Correlation Coefficient

Very weak diversification

The 3 months correlation between Enersys and Kimball is 0.55. Overlapping area represents the amount of risk that can be diversified away by holding Enersys and Kimball Electronics in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Kimball Electronics and Enersys 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 Enersys 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 Enersys i.e., Enersys and Kimball Electronics go up and down completely randomly.

Pair Corralation between Enersys and Kimball Electronics

Considering the 90-day investment horizon Enersys is expected to generate 0.96 times more return on investment than Kimball Electronics. However, Enersys is 1.05 times less risky than Kimball Electronics. It trades about 0.04 of its potential returns per unit of risk. Kimball Electronics is currently generating about 0.0 per unit of risk. If you would invest  6,777  in Enersys on May 10, 2024 and sell it today you would earn a total of  2,615  from holding Enersys or generate 38.59% return on investment over 90 days.
 Time Period 3 Months [change] Direction Moves Together Strength Weak Accuracy 100.0% Values Daily Returns

Enersys  vs.  Kimball Electronics

 Performance
 Timeline
 Enersys Correlation Profile

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Over the last 90 days Enersys has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively stable basic indicators, Enersys is not utilizing all of its potentials. The latest stock price uproar, may contribute to short-horizon losses for the private investors.
 Performance Backtest Predict
 Kimball Electronics Correlation Profile

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Over the last 90 days Kimball Electronics has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest abnormal performance, the Stock's technical and fundamental indicators remain sound and the latest tumult on Wall Street may also be a sign of longer-term gains for the firm shareholders.
 Performance Backtest Predict

Enersys and Kimball Electronics Volatility Contrast

 Predicted Return Density
 Returns

Pair Trading with Enersys and Kimball Electronics

The main advantage of trading using opposite Enersys and Kimball Electronics positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Enersys 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.
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The idea behind Enersys 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.
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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 Comparator module to compare the composition, asset allocations and performance of any two portfolios in your account.

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