Correlation Between Allied Motion and Daktronics
Can any of the company-specific risk be diversified away by investing in both Allied Motion and Daktronics 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 Allied Motion and Daktronics into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Allied Motion Technologies and Daktronics, you can compare the effects of market volatilities on Allied Motion and Daktronics 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 Allied Motion with a short position of Daktronics. Check out your portfolio center. Please also check ongoing floating volatility patterns of Allied Motion and Daktronics.
Diversification Opportunities for Allied Motion and Daktronics
0.25 | Correlation Coefficient |
Modest diversification
The 3 months correlation between Allied and Daktronics is 0.25. Overlapping area represents the amount of risk that can be diversified away by holding Allied Motion Technologies and Daktronics in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Daktronics and Allied Motion 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 Allied Motion Technologies are associated (or correlated) with Daktronics. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Daktronics has no effect on the direction of Allied Motion i.e., Allied Motion and Daktronics go up and down completely randomly.
Pair Corralation between Allied Motion and Daktronics
Given the investment horizon of 90 days Allied Motion is expected to generate 4.74 times less return on investment than Daktronics. But when comparing it to its historical volatility, Allied Motion Technologies is 1.53 times less risky than Daktronics. It trades about 0.03 of its potential returns per unit of risk. Daktronics is currently generating about 0.1 of returns per unit of risk over similar time horizon. If you would invest 332.00 in Daktronics on August 24, 2024 and sell it today you would earn a total of 1,156 from holding Daktronics or generate 348.19% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 32.06% |
| Values | Daily Returns |
Allied Motion Technologies vs. Daktronics
Performance |
| Timeline |
| Allied Motion Techno |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Very Weak
| Daktronics |
Allied Motion and Daktronics Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Allied Motion and Daktronics
The main advantage of trading using opposite Allied Motion and Daktronics positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Allied Motion position performs unexpectedly, Daktronics 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 Daktronics will offset losses from the drop in Daktronics' long position.| Allied Motion vs. Plexus Corp | Allied Motion vs. Sanmina | Allied Motion vs. Bel Fuse A | Allied Motion vs. Methode Electronics |
| Daktronics vs. Plexus Corp | Daktronics vs. OSI Systems | Daktronics vs. CTS Corporation | Daktronics vs. Benchmark Electronics |
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 Crypto Correlations module to use cryptocurrency correlation module to diversify your cryptocurrency portfolio across multiple coins.
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