Correlation Between Dow and KIMBALL ELECTRONICS

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

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

Diversification Opportunities for Dow and KIMBALL ELECTRONICS

-0.15

Correlation Coefficient

Dow  KIMBALL ELECTRONICS

Good diversification

The 3 months correlation between Dow and KIMBALL is -0.15. Overlapping area represents the amount of risk that can be diversified away by holding Dow Inc and KIMBALL ELECTRONICS in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on KIMBALL ELECTRONICS and Dow 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 Dow Inc 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 Dow i.e., Dow and KIMBALL ELECTRONICS go up and down completely randomly.

Pair Corralation between Dow and KIMBALL ELECTRONICS

Assuming the 90 days horizon Dow Inc is expected to under-perform the KIMBALL ELECTRONICS. But the stock apears to be less risky and, when comparing its historical volatility, Dow Inc is 1.33 times less risky than KIMBALL ELECTRONICS. The stock trades about -0.01 of its potential returns per unit of risk. The KIMBALL ELECTRONICS is currently generating about 0.16 of returns per unit of risk over similar time horizon. If you would invest  1,190  in KIMBALL ELECTRONICS on April 23, 2025 and sell it today you would earn a total of  460.00  from holding KIMBALL ELECTRONICS or generate 38.66% return on investment over 90 days.

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

Dow Inc  vs.  KIMBALL ELECTRONICS

Dow Inc

Risk-Adjusted Performance

Weak

Over the last 90 days Dow Inc has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable basic indicators, Dow is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

KIMBALL ELECTRONICS

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in KIMBALL ELECTRONICS are ranked lower than 12 (%) of all global equities and portfolios over the last 90 days. Despite nearly uncertain basic indicators, KIMBALL ELECTRONICS reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Dow and KIMBALL ELECTRONICS

The main advantage of trading using opposite Dow and KIMBALL ELECTRONICS positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Dow 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's long position.

The idea behind Dow Inc 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 Balance Of Power module to check stock momentum by analyzing Balance Of Power indicator and other technical ratios.