Correlation Between Ametek and Kadant

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

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

Diversification Opportunities for Ametek and Kadant

0.7

Correlation Coefficient

Ametek  Kadant

Poor diversification

The 3 months correlation between Ametek and Kadant is 0.7. Overlapping area represents the amount of risk that can be diversified away by holding Ametek Inc and Kadant Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Kadant Inc and Ametek 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 Ametek Inc 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 Ametek i.e., Ametek and Kadant go up and down completely randomly.

Pair Corralation between Ametek and Kadant

Considering the 90-day investment horizon Ametek Inc is expected to generate 0.59 times more return on investment than Kadant. However, Ametek Inc is 1.69 times less risky than Kadant. It trades about -0.02 of its potential returns per unit of risk. Kadant Inc is currently generating about -0.06 per unit of risk. If you would invest  18,622  in Ametek Inc on March 2, 2025 and sell it today you would lose (618.00) from holding Ametek Inc or give up 3.32% of portfolio value over 90 days.

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

Ametek Inc  vs.  Kadant Inc

Ametek Inc

Risk-Adjusted Performance

Very Weak

Over the last 90 days Ametek Inc has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of rather sound primary indicators, Ametek is not utilizing all of its potentials. The current stock price tumult, may contribute to shorter-term losses for the shareholders.

Kadant Inc

Risk-Adjusted Performance

Very Weak

Over the last 90 days Kadant Inc has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest weak performance, the Stock's basic indicators remain strong and the recent confusion on Wall Street may also be a sign of long-lasting gains for the firm traders.

Pair Trading with Ametek and Kadant

The main advantage of trading using opposite Ametek and Kadant positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Ametek 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 Ametek Inc 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 Funds Screener module to find actively-traded funds from around the world traded on over 30 global exchanges.