Correlation Between Kimball Electronics and Enovix Corp

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

Diversification Opportunities for Kimball Electronics and Enovix Corp

0.68
  Correlation Coefficient

Poor diversification

The 3 months correlation between Kimball and Enovix is 0.68. Overlapping area represents the amount of risk that can be diversified away by holding Kimball Electronics and Enovix Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Enovix Corp and Kimball Electronics 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 Kimball Electronics are associated (or correlated) with Enovix Corp. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Enovix Corp has no effect on the direction of Kimball Electronics i.e., Kimball Electronics and Enovix Corp go up and down completely randomly.

Pair Corralation between Kimball Electronics and Enovix Corp

Allowing for the 90-day total investment horizon Kimball Electronics is expected to generate 1.58 times less return on investment than Enovix Corp. But when comparing it to its historical volatility, Kimball Electronics is 2.55 times less risky than Enovix Corp. It trades about 0.03 of its potential returns per unit of risk. Enovix Corp is currently generating about 0.02 of returns per unit of risk over similar time horizon. If you would invest  1,200  in Enovix Corp on December 29, 2023 and sell it today you would lose (397.00) from holding Enovix Corp or give up 33.08% of portfolio value over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthSignificant
Accuracy100.0%
ValuesDaily Returns

Kimball Electronics  vs.  Enovix Corp

 Performance 
       Timeline  
Kimball Electronics 

Risk-Adjusted Performance

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Very Weak
Over the last 90 days Kimball Electronics has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of inconsistent performance in the last few months, the Stock's technical and fundamental indicators remain rather sound which may send shares a bit higher in April 2024. The latest tumult may also be a sign of longer-term up-swing for the firm shareholders.
Enovix Corp 

Risk-Adjusted Performance

0 of 100

 
Low
 
High
Very Weak
Over the last 90 days Enovix Corp has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of unsteady performance in the last few months, the Stock's basic indicators remain fairly strong which may send shares a bit higher in April 2024. The current disturbance may also be a sign of long term up-swing for the company investors.

Kimball Electronics and Enovix Corp Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Kimball Electronics and Enovix Corp

The main advantage of trading using opposite Kimball Electronics and Enovix Corp positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Kimball Electronics position performs unexpectedly, Enovix Corp 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 Enovix Corp will offset losses from the drop in Enovix Corp's long position.
The idea behind Kimball Electronics and Enovix Corp 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 Crypto Correlations module to use cryptocurrency correlation module to diversify your cryptocurrency portfolio across multiple coins.

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