Correlation Between Allient and FARO Technologies
Can any of the company-specific risk be diversified away by investing in both Allient and FARO Technologies 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 Allient and FARO Technologies into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Allient and FARO Technologies, you can compare the effects of market volatilities on Allient and FARO Technologies 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 Allient with a short position of FARO Technologies. Check out your portfolio center. Please also check ongoing floating volatility patterns of Allient and FARO Technologies.
Diversification Opportunities for Allient and FARO Technologies
0.84 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Allient and FARO is 0.84. Overlapping area represents the amount of risk that can be diversified away by holding Allient and FARO Technologies in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on FARO Technologies and Allient 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 Allient are associated (or correlated) with FARO Technologies. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of FARO Technologies has no effect on the direction of Allient i.e., Allient and FARO Technologies go up and down completely randomly.
Pair Corralation between Allient and FARO Technologies
Given the investment horizon of 90 days Allient is expected to under-perform the FARO Technologies. But the stock apears to be less risky and, when comparing its historical volatility, Allient is 1.38 times less risky than FARO Technologies. The stock trades about -0.01 of its potential returns per unit of risk. The FARO Technologies is currently generating about 0.01 of returns per unit of risk over similar time horizon. If you would invest 3,152 in FARO Technologies on August 30, 2024 and sell it today you would lose (525.00) from holding FARO Technologies or give up 16.66% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Allient vs. FARO Technologies
Performance |
| Timeline |
| Allient |
| FARO Technologies |
Allient and FARO Technologies Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Allient and FARO Technologies
The main advantage of trading using opposite Allient and FARO Technologies positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Allient position performs unexpectedly, FARO Technologies 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 FARO Technologies will offset losses from the drop in FARO Technologies' long position.| Allient vs. Old Republic International | Allient vs. Cincinnati Financial | Allient vs. Palomar Holdings | Allient vs. Aegean Airlines SA |
| FARO Technologies vs. Coherent | FARO Technologies vs. ESCO Technologies | FARO Technologies vs. Mesa Laboratories | FARO Technologies vs. Vishay Precision Group |
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 Fundamental Analysis module to view fundamental data based on most recent published financial statements.
Other Complementary Tools
| Sync Your Broker Sync your existing holdings, watchlists, positions or portfolios from thousands of online brokerage services, banks, investment account aggregators and robo-advisors. | |
| Equity Analysis Research over 250,000 global equities including funds, stocks and ETFs to find investment opportunities | |
| Equity Search Search for actively traded equities including funds and ETFs from over 30 global markets | |
| Theme Ratings Determine theme ratings based on digital equity recommendations. Macroaxis theme ratings are based on combination of fundamental analysis and risk-adjusted market performance | |
| Idea Breakdown Analyze constituents of all Macroaxis ideas. Macroaxis investment ideas are predefined, sector-focused investing themes |