Correlation Between Kennametal and Timken
Can any of the company-specific risk be diversified away by investing in both Kennametal and Timken 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 Kennametal and Timken into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Kennametal and Timken Company, you can compare the effects of market volatilities on Kennametal and Timken 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 Kennametal with a short position of Timken. Check out your portfolio center. Please also check ongoing floating volatility patterns of Kennametal and Timken.
Diversification Opportunities for Kennametal and Timken
0.98 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between Kennametal and Timken is 0.98. Overlapping area represents the amount of risk that can be diversified away by holding Kennametal and Timken Company in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Timken Company and Kennametal 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 Kennametal are associated (or correlated) with Timken. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Timken Company has no effect on the direction of Kennametal i.e., Kennametal and Timken go up and down completely randomly.
Pair Corralation between Kennametal and Timken
Considering the 90-day investment horizon Kennametal is expected to generate 0.76 times more return on investment than Timken. However, Kennametal is 1.32 times less risky than Timken. It trades about 0.12 of its potential returns per unit of risk. Timken Company is currently generating about -0.01 per unit of risk. If you would invest 2,394 in Kennametal on May 2, 2025 and sell it today you would earn a total of 93.00 from holding Kennametal or generate 3.88% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Kennametal vs. Timken Company
Performance |
| Timeline |
| Kennametal |
| Timken Company |
Kennametal and Timken Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Kennametal and Timken
The main advantage of trading using opposite Kennametal and Timken positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Kennametal position performs unexpectedly, Timken 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 Timken will offset losses from the drop in Timken's long position.| Kennametal vs. Eastern Co | Kennametal vs. Timken Company | Kennametal vs. Lincoln Electric Holdings | Kennametal vs. Hillman Solutions Corp |
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 Portfolio Comparator module to compare the composition, asset allocations and performance of any two portfolios in your account.
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