diversifiable risk of combining Eos Energy and Kimball Electronics into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Eos Energy Enterprises and Kimball Electronics, you can compare the effects of market volatilities on Eos Energy 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 Eos Energy with a short position of Kimball Electronics. Check out your portfolio center. Please also check ongoing floating volatility patterns of Eos Energy and Kimball Electronics.
Diversification Opportunities for Eos Energy and Kimball Electronics
Pair Corralation between Eos Energy and Kimball Electronics
Given the investment horizon of 90 days Eos Energy Enterprises is expected to generate 3.28 times more return on investment than Kimball Electronics. However, Eos Energy is 3.28 times more volatile than Kimball Electronics. It trades about 0.01 of its potential returns per unit of risk. Kimball Electronics is currently generating about -0.01 per unit of risk. If you would invest 191.00 in Eos Energy Enterprises on December 1, 2023 and sell it today you would lose (92.00) from holding Eos Energy Enterprises or give up 48.17% of portfolio value over 90 days.
Eos Energy Enterprises vs. Kimball Electronics
Eos Energy and Kimball Electronics Volatility Contrast
Pair Trading with Eos Energy and Kimball ElectronicsThe main advantage of trading using opposite Eos Energy and Kimball Electronics positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Eos Energy 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 Eos Energy Enterprises 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.
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 Portfolio Center module to all portfolio management and optimization tools to improve performance of your portfolios.
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