Correlation Between Averbuch Formica and IMCO Industries
Can any of the company-specific risk be diversified away by investing in both Averbuch Formica and IMCO Industries 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 Averbuch Formica and IMCO Industries into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Averbuch Formica Center and IMCO Industries, you can compare the effects of market volatilities on Averbuch Formica and IMCO Industries 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 Averbuch Formica with a short position of IMCO Industries. Check out your portfolio center. Please also check ongoing floating volatility patterns of Averbuch Formica and IMCO Industries.
Diversification Opportunities for Averbuch Formica and IMCO Industries
-0.16 | Correlation Coefficient |
Good diversification
The 3 months correlation between Averbuch and IMCO is -0.16. Overlapping area represents the amount of risk that can be diversified away by holding Averbuch Formica Center and IMCO Industries in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on IMCO Industries and Averbuch Formica 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 Averbuch Formica Center are associated (or correlated) with IMCO Industries. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of IMCO Industries has no effect on the direction of Averbuch Formica i.e., Averbuch Formica and IMCO Industries go up and down completely randomly.
Pair Corralation between Averbuch Formica and IMCO Industries
Assuming the 90 days trading horizon Averbuch Formica Center is expected to under-perform the IMCO Industries. But the stock apears to be less risky and, when comparing its historical volatility, Averbuch Formica Center is 1.0 times less risky than IMCO Industries. The stock trades about -0.18 of its potential returns per unit of risk. The IMCO Industries is currently generating about -0.02 of returns per unit of risk over similar time horizon. If you would invest 269,900 in IMCO Industries on January 20, 2024 and sell it today you would lose (7,300) from holding IMCO Industries or give up 2.7% of portfolio value over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Against |
Strength | Insignificant |
Accuracy | 100.0% |
Values | Daily Returns |
Averbuch Formica Center vs. IMCO Industries
Performance |
Timeline |
Averbuch Formica Center |
IMCO Industries |
Averbuch Formica and IMCO Industries Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Averbuch Formica and IMCO Industries
The main advantage of trading using opposite Averbuch Formica and IMCO Industries positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Averbuch Formica position performs unexpectedly, IMCO Industries 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 IMCO Industries will offset losses from the drop in IMCO Industries' long position.Averbuch Formica vs. EN Shoham Business | Averbuch Formica vs. Accel Solutions Group | Averbuch Formica vs. Mivtach Shamir | Averbuch Formica vs. Rani Zim Shopping |
IMCO Industries vs. EN Shoham Business | IMCO Industries vs. Accel Solutions Group | IMCO Industries vs. Mivtach Shamir | IMCO Industries vs. Rani Zim Shopping |
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 Bollinger Bands module to use Bollinger Bands indicator to analyze target price for a given investing horizon.
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