Correlation Between McGrath RentCorp and Comtech Telecommunicatio
Can any of the company-specific risk be diversified away by investing in both McGrath RentCorp and Comtech Telecommunicatio 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 McGrath RentCorp and Comtech Telecommunicatio into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between McGrath RentCorp and Comtech Telecommunications Corp, you can compare the effects of market volatilities on McGrath RentCorp and Comtech Telecommunicatio 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 McGrath RentCorp with a short position of Comtech Telecommunicatio. Check out your portfolio center. Please also check ongoing floating volatility patterns of McGrath RentCorp and Comtech Telecommunicatio.
Diversification Opportunities for McGrath RentCorp and Comtech Telecommunicatio
0.42 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between McGrath and Comtech is 0.42. Overlapping area represents the amount of risk that can be diversified away by holding McGrath RentCorp and Comtech Telecommunications Cor in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Comtech Telecommunicatio and McGrath RentCorp 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 McGrath RentCorp are associated (or correlated) with Comtech Telecommunicatio. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Comtech Telecommunicatio has no effect on the direction of McGrath RentCorp i.e., McGrath RentCorp and Comtech Telecommunicatio go up and down completely randomly.
Pair Corralation between McGrath RentCorp and Comtech Telecommunicatio
Given the investment horizon of 90 days McGrath RentCorp is expected to generate 0.36 times more return on investment than Comtech Telecommunicatio. However, McGrath RentCorp is 2.8 times less risky than Comtech Telecommunicatio. It trades about 0.05 of its potential returns per unit of risk. Comtech Telecommunications Corp is currently generating about -0.07 per unit of risk. If you would invest 7,942 in McGrath RentCorp on January 24, 2024 and sell it today you would earn a total of 2,824 from holding McGrath RentCorp or generate 35.56% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Together |
Strength | Weak |
Accuracy | 99.8% |
Values | Daily Returns |
McGrath RentCorp vs. Comtech Telecommunications Cor
Performance |
Timeline |
McGrath RentCorp |
Comtech Telecommunicatio |
McGrath RentCorp and Comtech Telecommunicatio Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with McGrath RentCorp and Comtech Telecommunicatio
The main advantage of trading using opposite McGrath RentCorp and Comtech Telecommunicatio positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if McGrath RentCorp position performs unexpectedly, Comtech Telecommunicatio 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 Comtech Telecommunicatio will offset losses from the drop in Comtech Telecommunicatio's long position.McGrath RentCorp vs. Allegion PLC | McGrath RentCorp vs. Resideo Technologies | McGrath RentCorp vs. Mistras Group |
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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 Positions Ratings module to determine portfolio positions ratings based on digital equity recommendations. Macroaxis instant position ratings are based on combination of fundamental analysis and risk-adjusted market performance.
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