Correlation Between Cognex and Keysight Technologies
Can any of the company-specific risk be diversified away by investing in both Cognex and Keysight 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 Cognex and Keysight Technologies into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Cognex and Keysight Technologies, you can compare the effects of market volatilities on Cognex and Keysight 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 Cognex with a short position of Keysight Technologies. Check out your portfolio center. Please also check ongoing floating volatility patterns of Cognex and Keysight Technologies.
Diversification Opportunities for Cognex and Keysight Technologies
0.76 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Cognex and Keysight is 0.76. Overlapping area represents the amount of risk that can be diversified away by holding Cognex and Keysight Technologies in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Keysight Technologies and Cognex 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 Cognex are associated (or correlated) with Keysight Technologies. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Keysight Technologies has no effect on the direction of Cognex i.e., Cognex and Keysight Technologies go up and down completely randomly.
Pair Corralation between Cognex and Keysight Technologies
Assuming the 90 days horizon Cognex is expected to generate 5.37 times less return on investment than Keysight Technologies. But when comparing it to its historical volatility, Cognex is 1.17 times less risky than Keysight Technologies. It trades about 0.07 of its potential returns per unit of risk. Keysight Technologies is currently generating about 0.3 of returns per unit of risk over similar time horizon. If you would invest 13,698 in Keysight Technologies on September 2, 2024 and sell it today you would earn a total of 2,432 from holding Keysight Technologies or generate 17.75% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Cognex vs. Keysight Technologies
Performance |
| Timeline |
| Cognex |
| Keysight Technologies |
Cognex and Keysight Technologies Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Cognex and Keysight Technologies
The main advantage of trading using opposite Cognex and Keysight Technologies positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Cognex position performs unexpectedly, Keysight 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 Keysight Technologies will offset losses from the drop in Keysight Technologies' long position.| Cognex vs. Superior Plus Corp | Cognex vs. NMI Holdings | Cognex vs. Origin Agritech | Cognex vs. SIVERS SEMICONDUCTORS AB |
| Keysight Technologies vs. Superior Plus Corp | Keysight Technologies vs. NMI Holdings | Keysight Technologies vs. Origin Agritech | Keysight Technologies vs. SIVERS SEMICONDUCTORS AB |
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 Portfolio Manager module to state of the art Portfolio Manager to monitor and improve performance of your invested capital.
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