Correlation Between ATS and Flowserve
Can any of the company-specific risk be diversified away by investing in both ATS and Flowserve 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 ATS and Flowserve into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between ATS Corporation and Flowserve, you can compare the effects of market volatilities on ATS and Flowserve 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 ATS with a short position of Flowserve. Check out your portfolio center. Please also check ongoing floating volatility patterns of ATS and Flowserve.
Diversification Opportunities for ATS and Flowserve
Poor diversification
The 3 months correlation between ATS and Flowserve is 0.64. Overlapping area represents the amount of risk that can be diversified away by holding ATS Corp. and Flowserve in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Flowserve and ATS 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 ATS Corporation are associated (or correlated) with Flowserve. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Flowserve has no effect on the direction of ATS i.e., ATS and Flowserve go up and down completely randomly.
Pair Corralation between ATS and Flowserve
Considering the 90-day investment horizon ATS is expected to generate 6.63 times less return on investment than Flowserve. In addition to that, ATS is 1.43 times more volatile than Flowserve. It trades about 0.03 of its total potential returns per unit of risk. Flowserve is currently generating about 0.28 per unit of volatility. If you would invest 5,414 in Flowserve on August 30, 2024 and sell it today you would earn a total of 717.00 from holding Flowserve or generate 13.24% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 95.65% |
| Values | Daily Returns |
ATS Corp. vs. Flowserve
Performance |
| Timeline |
| ATS Corporation |
| Flowserve |
ATS and Flowserve Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with ATS and Flowserve
The main advantage of trading using opposite ATS and Flowserve positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if ATS position performs unexpectedly, Flowserve 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 Flowserve will offset losses from the drop in Flowserve's long position.| ATS vs. Keurig Dr Pepper | ATS vs. NetSol Technologies | ATS vs. Westrock Coffee | ATS vs. Sapiens International |
| Flowserve vs. Illinois Tool Works | Flowserve vs. Pentair PLC | Flowserve vs. Emerson Electric | Flowserve 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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