Correlation Between TECO Electric and Allis Electric
Can any of the company-specific risk be diversified away by investing in both TECO Electric and Allis Electric 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 TECO Electric and Allis Electric into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between TECO Electric Machinery and Allis Electric Co, you can compare the effects of market volatilities on TECO Electric and Allis Electric 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 TECO Electric with a short position of Allis Electric. Check out your portfolio center. Please also check ongoing floating volatility patterns of TECO Electric and Allis Electric.
Diversification Opportunities for TECO Electric and Allis Electric
-0.47 | Correlation Coefficient |
Very good diversification
The 3 months correlation between TECO and Allis is -0.47. Overlapping area represents the amount of risk that can be diversified away by holding TECO Electric Machinery and Allis Electric Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Allis Electric and TECO Electric 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 TECO Electric Machinery are associated (or correlated) with Allis Electric. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Allis Electric has no effect on the direction of TECO Electric i.e., TECO Electric and Allis Electric go up and down completely randomly.
Pair Corralation between TECO Electric and Allis Electric
Assuming the 90 days trading horizon TECO Electric Machinery is expected to generate 0.77 times more return on investment than Allis Electric. However, TECO Electric Machinery is 1.29 times less risky than Allis Electric. It trades about 0.17 of its potential returns per unit of risk. Allis Electric Co is currently generating about -0.04 per unit of risk. If you would invest 4,990 in TECO Electric Machinery on September 3, 2024 and sell it today you would earn a total of 320.00 from holding TECO Electric Machinery or generate 6.41% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
TECO Electric Machinery vs. Allis Electric Co
Performance |
| Timeline |
| TECO Electric Machinery |
| Allis Electric |
TECO Electric and Allis Electric Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with TECO Electric and Allis Electric
The main advantage of trading using opposite TECO Electric and Allis Electric positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if TECO Electric position performs unexpectedly, Allis Electric 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 Allis Electric will offset losses from the drop in Allis Electric's long position.| TECO Electric vs. Universal Microelectronics Co | TECO Electric vs. AVerMedia Technologies | TECO Electric vs. Symtek Automation Asia | TECO Electric vs. WiseChip Semiconductor |
| Allis Electric vs. Chung Hsin Electric Machinery | Allis Electric vs. Fortune Electric Co | Allis Electric vs. TECO Electric Machinery | Allis Electric vs. Shihlin Electric Engineering |
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 Options Analysis module to analyze and evaluate options and option chains as a potential hedge for your portfolios.
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