Correlation Between Enerpac Tool and Kadant

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

By analyzing existing cross correlation between Enerpac Tool Group and Kadant Inc, you can compare the effects of market volatilities on Enerpac Tool and Kadant 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 Enerpac Tool with a short position of Kadant. Check out your portfolio center. Please also check ongoing floating volatility patterns of Enerpac Tool and Kadant.

Diversification Opportunities for Enerpac Tool and Kadant

-0.22

Correlation Coefficient

Enerpac Tool  Kadant

Very good diversification

The 3 months correlation between Enerpac and Kadant is -0.22. Overlapping area represents the amount of risk that can be diversified away by holding Enerpac Tool Group and Kadant Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Kadant Inc and Enerpac Tool 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 Enerpac Tool Group are associated (or correlated) with Kadant. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Kadant Inc has no effect on the direction of Enerpac Tool i.e., Enerpac Tool and Kadant go up and down completely randomly.

Pair Corralation between Enerpac Tool and Kadant

Given the investment horizon of 90 days Enerpac Tool Group is expected to generate 0.53 times more return on investment than Kadant. However, Enerpac Tool Group is 1.9 times less risky than Kadant. It trades about 0.25 of its potential returns per unit of risk. Kadant Inc is currently generating about -0.23 per unit of risk. If you would invest  3,483  in Enerpac Tool Group on February 4, 2024 and sell it today you would earn a total of  200.00  from holding Enerpac Tool Group or generate 5.74% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	100.0%
Values	Daily Returns

Enerpac Tool Group  vs.  Kadant Inc

Enerpac Tool Group

Risk-Adjusted Performance

16 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Enerpac Tool Group are ranked lower than 16 (%) of all global equities and portfolios over the last 90 days. In spite of rather unsteady basic indicators, Enerpac Tool exhibited solid returns over the last few months and may actually be approaching a breakup point.

Kadant Inc

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Kadant Inc has generated negative risk-adjusted returns adding no value to investors with long positions. Despite fairly strong basic indicators, Kadant is not utilizing all of its potentials. The latest stock price confusion, may contribute to short-horizon losses for the traders.

Pair Trading with Enerpac Tool and Kadant

The main advantage of trading using opposite Enerpac Tool and Kadant positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Enerpac Tool position performs unexpectedly, Kadant 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 Kadant will offset losses from the drop in Kadant's long position.

The idea behind Enerpac Tool Group and Kadant Inc 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 Correlation Analysis module to reduce portfolio risk simply by holding instruments which are not perfectly correlated.