Correlation Between Flowserve and Kadant
Can any of the company-specific risk be diversified away by investing in both Flowserve 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 Flowserve and Kadant into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Flowserve and Kadant Inc, you can compare the effects of market volatilities on Flowserve 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 Flowserve with a short position of Kadant. Check out your portfolio center. Please also check ongoing floating volatility patterns of Flowserve and Kadant.
Diversification Opportunities for Flowserve and Kadant
Poor diversification
The 3 months correlation between Flowserve and Kadant is 0.66. Overlapping area represents the amount of risk that can be diversified away by holding Flowserve and Kadant Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Kadant Inc and Flowserve 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 Flowserve 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 Flowserve i.e., Flowserve and Kadant go up and down completely randomly.
Pair Corralation between Flowserve and Kadant
Considering the 90-day investment horizon Flowserve is expected to generate 0.61 times more return on investment than Kadant. However, Flowserve is 1.63 times less risky than Kadant. It trades about -0.11 of its potential returns per unit of risk. Kadant Inc is currently generating about -0.16 per unit of risk. If you would invest 5,600 in Flowserve on May 31, 2025 and sell it today you would lose (235.50) from holding Flowserve or give up 4.21% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Flowserve vs. Kadant Inc
Performance |
| Timeline |
| Flowserve |
| Kadant Inc |
Flowserve and Kadant Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Flowserve and Kadant
The main advantage of trading using opposite Flowserve and Kadant positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Flowserve 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.| Flowserve vs. IDEX Corporation | Flowserve vs. Donaldson | Flowserve vs. Ingersoll Rand | Flowserve vs. Franklin Electric Co |
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 Bollinger Bands module to use Bollinger Bands indicator to analyze target price for a given investing horizon.
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