Correlation Between Flowserve and Omega Flex
Can any of the company-specific risk be diversified away by investing in both Flowserve and Omega Flex 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 Flowserve and Omega Flex into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Flowserve and Omega Flex, you can compare the effects of market volatilities on Flowserve and Omega Flex 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 Flowserve with a short position of Omega Flex. Check out your portfolio center. Please also check ongoing floating volatility patterns of Flowserve and Omega Flex.
Diversification Opportunities for Flowserve and Omega Flex
-0.66 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Flowserve and Omega is -0.66. Overlapping area represents the amount of risk that can be diversified away by holding Flowserve and Omega Flex in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Omega Flex and Flowserve 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 Flowserve are associated (or correlated) with Omega Flex. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Omega Flex has no effect on the direction of Flowserve i.e., Flowserve and Omega Flex go up and down completely randomly.
Pair Corralation between Flowserve and Omega Flex
Considering the 90-day investment horizon Flowserve is expected to generate 0.98 times more return on investment than Omega Flex. However, Flowserve is 1.02 times less risky than Omega Flex. It trades about 0.44 of its potential returns per unit of risk. Omega Flex is currently generating about -0.07 per unit of risk. If you would invest 4,604 in Flowserve on February 20, 2024 and sell it today you would earn a total of 359.00 from holding Flowserve or generate 7.8% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Against |
Strength | Weak |
Accuracy | 100.0% |
Values | Daily Returns |
Flowserve vs. Omega Flex
Performance |
Timeline |
Flowserve |
Omega Flex |
Flowserve and Omega Flex Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Flowserve and Omega Flex
The main advantage of trading using opposite Flowserve and Omega Flex positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Flowserve position performs unexpectedly, Omega Flex 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 Omega Flex will offset losses from the drop in Omega Flex's long position.Flowserve vs. IDEX Corporation | Flowserve vs. Donaldson | Flowserve vs. Ingersoll Rand | Flowserve vs. Franklin Electric Co |
Omega Flex vs. Illinois Tool Works | Omega Flex vs. Pentair PLC | Omega Flex vs. Emerson Electric | Omega Flex vs. Smith AO |
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 Idea Breakdown module to analyze constituents of all Macroaxis ideas. Macroaxis investment ideas are predefined, sector-focused investing themes.
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