Correlation Between Federal Signal and Flexpoint Sensor
Can any of the company-specific risk be diversified away by investing in both Federal Signal and Flexpoint Sensor 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 Federal Signal and Flexpoint Sensor into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Federal Signal and Flexpoint Sensor Systems, you can compare the effects of market volatilities on Federal Signal and Flexpoint Sensor 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 Federal Signal with a short position of Flexpoint Sensor. Check out your portfolio center. Please also check ongoing floating volatility patterns of Federal Signal and Flexpoint Sensor.
Diversification Opportunities for Federal Signal and Flexpoint Sensor
0.18 | Correlation Coefficient |
Average diversification
The 3 months correlation between Federal and Flexpoint is 0.18. Overlapping area represents the amount of risk that can be diversified away by holding Federal Signal and Flexpoint Sensor Systems in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Flexpoint Sensor Systems and Federal Signal 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 Federal Signal are associated (or correlated) with Flexpoint Sensor. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Flexpoint Sensor Systems has no effect on the direction of Federal Signal i.e., Federal Signal and Flexpoint Sensor go up and down completely randomly.
Pair Corralation between Federal Signal and Flexpoint Sensor
Considering the 90-day investment horizon Federal Signal is expected to generate 7.22 times less return on investment than Flexpoint Sensor. But when comparing it to its historical volatility, Federal Signal is 15.67 times less risky than Flexpoint Sensor. It trades about 0.05 of its potential returns per unit of risk. Flexpoint Sensor Systems is currently generating about 0.02 of returns per unit of risk over similar time horizon. If you would invest 0.62 in Flexpoint Sensor Systems on January 26, 2024 and sell it today you would lose (0.17) from holding Flexpoint Sensor Systems or give up 27.42% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Federal Signal vs. Flexpoint Sensor Systems
Performance |
| Timeline |
| Federal Signal |
| Flexpoint Sensor Systems |
Federal Signal and Flexpoint Sensor Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Federal Signal and Flexpoint Sensor
The main advantage of trading using opposite Federal Signal and Flexpoint Sensor positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Federal Signal position performs unexpectedly, Flexpoint Sensor 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 Flexpoint Sensor will offset losses from the drop in Flexpoint Sensor's long position.| Federal Signal vs. Energy Recovery | Federal Signal vs. CECO Environmental Corp | Federal Signal vs. 374Water Common Stock | Federal Signal vs. CO2 Solutions |
| Flexpoint Sensor vs. Mojo Data Solutions | Flexpoint Sensor vs. TrackX Holdings | Flexpoint Sensor vs. Maptelligent | Flexpoint Sensor vs. Obocon Inc |
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 Investing Opportunities module to build portfolios using our predefined set of ideas and optimize them against your investing preferences.
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