Correlation Between CSW Industrials and Omega Flex
Can any of the company-specific risk be diversified away by investing in both CSW Industrials and Omega Flex 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 CSW Industrials and Omega Flex into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between CSW Industrials and Omega Flex, you can compare the effects of market volatilities on CSW Industrials and Omega Flex 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 CSW Industrials with a short position of Omega Flex. Check out your portfolio center. Please also check ongoing floating volatility patterns of CSW Industrials and Omega Flex.
Diversification Opportunities for CSW Industrials and Omega Flex
0.66 | Correlation Coefficient |
Poor diversification
The 3 months correlation between CSW and Omega is 0.66. Overlapping area represents the amount of risk that can be diversified away by holding CSW Industrials and Omega Flex in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Omega Flex and CSW Industrials 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 CSW Industrials are associated (or correlated) with Omega Flex. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Omega Flex has no effect on the direction of CSW Industrials i.e., CSW Industrials and Omega Flex go up and down completely randomly.
Pair Corralation between CSW Industrials and Omega Flex
Given the investment horizon of 90 days CSW Industrials is expected to under-perform the Omega Flex. But the stock apears to be less risky and, when comparing its historical volatility, CSW Industrials is 1.1 times less risky than Omega Flex. The stock trades about -0.13 of its potential returns per unit of risk. The Omega Flex is currently generating about -0.07 of returns per unit of risk over similar time horizon. If you would invest 4,100 in Omega Flex on November 3, 2024 and sell it today you would lose (164.00) from holding Omega Flex or give up 4.0% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
CSW Industrials vs. Omega Flex
Performance |
| Timeline |
| CSW Industrials |
| Omega Flex |
CSW Industrials and Omega Flex Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with CSW Industrials and Omega Flex
The main advantage of trading using opposite CSW Industrials and Omega Flex positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if CSW Industrials position performs unexpectedly, Omega Flex 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 Omega Flex will offset losses from the drop in Omega Flex's long position.| CSW Industrials vs. Enerpac Tool Group | CSW Industrials vs. Luxfer Holdings PLC | CSW Industrials vs. ITT Inc | CSW Industrials vs. IDEX Corporation |
| Omega Flex vs. Helios Technologies | Omega Flex vs. Enpro Industries | Omega Flex vs. Luxfer Holdings PLC | Omega Flex vs. Hurco Companies |
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 AI Portfolio Architect module to use AI to generate optimal portfolios and find profitable investment opportunities.
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