Correlation Between Pure Storage and IDEX
Can any of the company-specific risk be diversified away by investing in both Pure Storage and IDEX 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 Pure Storage and IDEX into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Pure Storage and IDEX Corporation, you can compare the effects of market volatilities on Pure Storage and IDEX 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 Pure Storage with a short position of IDEX. Check out your portfolio center. Please also check ongoing floating volatility patterns of Pure Storage and IDEX.
Diversification Opportunities for Pure Storage and IDEX
0.76 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Pure and IDEX is 0.76. Overlapping area represents the amount of risk that can be diversified away by holding Pure Storage and IDEX Corp. in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on IDEX and Pure Storage 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 Pure Storage are associated (or correlated) with IDEX. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of IDEX has no effect on the direction of Pure Storage i.e., Pure Storage and IDEX go up and down completely randomly.
Pair Corralation between Pure Storage and IDEX
Given the investment horizon of 90 days Pure Storage is expected to generate 1.86 times more return on investment than IDEX. However, Pure Storage is 1.86 times more volatile than IDEX Corporation. It trades about 0.01 of its potential returns per unit of risk. IDEX Corporation is currently generating about -0.29 per unit of risk. If you would invest 5,179 in Pure Storage on January 20, 2024 and sell it today you would earn a total of 3.00 from holding Pure Storage or generate 0.06% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 95.45% |
| Values | Daily Returns |
Pure Storage vs. IDEX Corp.
Performance |
| Timeline |
| Pure Storage |
| IDEX |
Pure Storage and IDEX Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Pure Storage and IDEX
The main advantage of trading using opposite Pure Storage and IDEX positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Pure Storage position performs unexpectedly, IDEX 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 IDEX will offset losses from the drop in IDEX's long position.| Pure Storage vs. LG Display Co | Pure Storage vs. Sony Corp | Pure Storage vs. Sonos Inc | Pure Storage vs. Vizio Holding Corp |
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 USA ETFs module to find actively traded Exchange Traded Funds (ETF) in USA.
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