Correlation Between Cognex and Equity Lifestyle
Can any of the company-specific risk be diversified away by investing in both Cognex and Equity Lifestyle 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 Cognex and Equity Lifestyle into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Cognex and Equity Lifestyle Properties, you can compare the effects of market volatilities on Cognex and Equity Lifestyle 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 Cognex with a short position of Equity Lifestyle. Check out your portfolio center. Please also check ongoing floating volatility patterns of Cognex and Equity Lifestyle.
Diversification Opportunities for Cognex and Equity Lifestyle
-0.55 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Cognex and Equity is -0.55. Overlapping area represents the amount of risk that can be diversified away by holding Cognex and Equity Lifestyle Properties in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Equity Lifestyle Pro and Cognex 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 Cognex are associated (or correlated) with Equity Lifestyle. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Equity Lifestyle Pro has no effect on the direction of Cognex i.e., Cognex and Equity Lifestyle go up and down completely randomly.
Pair Corralation between Cognex and Equity Lifestyle
Given the investment horizon of 90 days Cognex is expected to generate 1.67 times more return on investment than Equity Lifestyle. However, Cognex is 1.67 times more volatile than Equity Lifestyle Properties. It trades about -0.02 of its potential returns per unit of risk. Equity Lifestyle Properties is currently generating about -0.12 per unit of risk. If you would invest 4,079 in Cognex on January 19, 2024 and sell it today you would lose (158.00) from holding Cognex or give up 3.87% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 98.78% |
| Values | Daily Returns |
Cognex vs. Equity Lifestyle Properties
Performance |
| Timeline |
| Cognex |
| Equity Lifestyle Pro |
Cognex and Equity Lifestyle Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Cognex and Equity Lifestyle
The main advantage of trading using opposite Cognex and Equity Lifestyle positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Cognex position performs unexpectedly, Equity Lifestyle 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 Equity Lifestyle will offset losses from the drop in Equity Lifestyle's long position.| Cognex vs. Coherent | Cognex vs. ESCO Technologies | Cognex vs. Mesa Laboratories | Cognex vs. Vishay Precision Group |
| Equity Lifestyle vs. UDR Inc | Equity Lifestyle vs. Centerspace | Equity Lifestyle vs. Veris Residential | Equity Lifestyle vs. Mid America Apartment 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 Watchlist Optimization module to optimize watchlists to build efficient portfolios or rebalance existing positions based on the mean-variance optimization algorithm.
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