Correlation Between Meritage and Kadant
Can any of the company-specific risk be diversified away by investing in both Meritage 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 Meritage and Kadant into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Meritage and Kadant Inc, you can compare the effects of market volatilities on Meritage 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 Meritage with a short position of Kadant. Check out your portfolio center. Please also check ongoing floating volatility patterns of Meritage and Kadant.
Diversification Opportunities for Meritage and Kadant
Poor diversification
The 3 months correlation between Meritage and Kadant is 0.69. Overlapping area represents the amount of risk that can be diversified away by holding Meritage and Kadant Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Kadant Inc and Meritage 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 Meritage 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 Meritage i.e., Meritage and Kadant go up and down completely randomly.
Pair Corralation between Meritage and Kadant
Considering the 90-day investment horizon Meritage is expected to generate 1.22 times more return on investment than Kadant. However, Meritage is 1.22 times more volatile than Kadant Inc. It trades about 0.13 of its potential returns per unit of risk. Kadant Inc is currently generating about 0.06 per unit of risk. If you would invest 6,356 in Meritage on May 29, 2025 and sell it today you would earn a total of 1,362 from holding Meritage or generate 21.43% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Meritage vs. Kadant Inc
Performance |
| Timeline |
| Meritage |
| Kadant Inc |
Meritage and Kadant Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Meritage and Kadant
The main advantage of trading using opposite Meritage and Kadant positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Meritage 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.| Meritage vs. TRI Pointe Homes | Meritage vs. MI Homes | Meritage vs. Beazer Homes USA | Meritage vs. Century Communities |
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 Financial Widgets module to easily integrated Macroaxis content with over 30 different plug-and-play financial widgets.
Other Complementary Tools
| Global Markets Map Get a quick overview of global market snapshot using zoomable world map. Drill down to check world indexes | |
| Money Flow Index Determine momentum by analyzing Money Flow Index and other technical indicators | |
| CEOs Directory Screen CEOs from public companies around the world | |
| Portfolio Suggestion Get suggestions outside of your existing asset allocation including your own model portfolios | |
| Price Exposure Probability Analyze equity upside and downside potential for a given time horizon across multiple markets |