Correlation Between IRobot and Fabrinet
Can any of the company-specific risk be diversified away by investing in both IRobot and Fabrinet 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 IRobot and Fabrinet into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between iRobot and Fabrinet, you can compare the effects of market volatilities on IRobot and Fabrinet 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 IRobot with a short position of Fabrinet. Check out your portfolio center. Please also check ongoing floating volatility patterns of IRobot and Fabrinet.
Diversification Opportunities for IRobot and Fabrinet
Modest diversification
The 3 months correlation between IRobot and Fabrinet is 0.29. Overlapping area represents the amount of risk that can be diversified away by holding iRobot and Fabrinet in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Fabrinet and IRobot 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 iRobot are associated (or correlated) with Fabrinet. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Fabrinet has no effect on the direction of IRobot i.e., IRobot and Fabrinet go up and down completely randomly.
Pair Corralation between IRobot and Fabrinet
Given the investment horizon of 90 days iRobot is expected to generate 2.08 times more return on investment than Fabrinet. However, IRobot is 2.08 times more volatile than Fabrinet. It trades about -0.1 of its potential returns per unit of risk. Fabrinet is currently generating about -0.22 per unit of risk. If you would invest 860.00 in iRobot on January 20, 2024 and sell it today you would lose (135.00) from holding iRobot or give up 15.7% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 95.65% |
| Values | Daily Returns |
iRobot vs. Fabrinet
Performance |
| Timeline |
| iRobot |
| Fabrinet |
IRobot and Fabrinet Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with IRobot and Fabrinet
The main advantage of trading using opposite IRobot and Fabrinet positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if IRobot position performs unexpectedly, Fabrinet 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 Fabrinet will offset losses from the drop in Fabrinet's long position.| IRobot vs. Meta Materials | IRobot vs. Sphere 3D Corp | IRobot vs. Katapult Holdings | IRobot vs. Aquagold International |
| Fabrinet vs. Maximus | Fabrinet vs. Network 1 Technologies | Fabrinet vs. First Advantage Corp | Fabrinet vs. BrightView Holdings |
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 Diagnostics module to use generated alerts and portfolio events aggregator to diagnose current holdings.
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