Correlation Between CVD Equipment and Taylor Devices
Can any of the company-specific risk be diversified away by investing in both CVD Equipment and Taylor Devices 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 CVD Equipment and Taylor Devices into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between CVD Equipment and Taylor Devices, you can compare the effects of market volatilities on CVD Equipment and Taylor Devices 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 CVD Equipment with a short position of Taylor Devices. Check out your portfolio center. Please also check ongoing floating volatility patterns of CVD Equipment and Taylor Devices.
Diversification Opportunities for CVD Equipment and Taylor Devices
-0.63 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between CVD and Taylor is -0.63. Overlapping area represents the amount of risk that can be diversified away by holding CVD Equipment and Taylor Devices in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Taylor Devices and CVD Equipment 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 CVD Equipment are associated (or correlated) with Taylor Devices. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Taylor Devices has no effect on the direction of CVD Equipment i.e., CVD Equipment and Taylor Devices go up and down completely randomly.
Pair Corralation between CVD Equipment and Taylor Devices
Considering the 90-day investment horizon CVD Equipment is expected to generate 1.28 times more return on investment than Taylor Devices. However, CVD Equipment is 1.28 times more volatile than Taylor Devices. It trades about 0.07 of its potential returns per unit of risk. Taylor Devices is currently generating about -0.11 per unit of risk. If you would invest 313.00 in CVD Equipment on October 26, 2024 and sell it today you would earn a total of 46.00 from holding CVD Equipment or generate 14.7% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
CVD Equipment vs. Taylor Devices
Performance |
| Timeline |
| CVD Equipment |
| Taylor Devices |
CVD Equipment and Taylor Devices Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with CVD Equipment and Taylor Devices
The main advantage of trading using opposite CVD Equipment and Taylor Devices positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if CVD Equipment position performs unexpectedly, Taylor Devices 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 Taylor Devices will offset losses from the drop in Taylor Devices' long position.| CVD Equipment vs. Standex International | CVD Equipment vs. Intevac | CVD Equipment vs. Thermon Group Holdings | CVD Equipment vs. Enpro Industries |
| Taylor Devices vs. Tennant Company | Taylor Devices vs. Kadant Inc | Taylor Devices vs. Enpro Industries | Taylor Devices vs. Luxfer Holdings PLC |
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 Latest Portfolios module to quick portfolio dashboard that showcases your latest portfolios.
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