Correlation Between Donaldson and Xometry
Can any of the company-specific risk be diversified away by investing in both Donaldson and Xometry 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 Donaldson and Xometry into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Donaldson and Xometry, you can compare the effects of market volatilities on Donaldson and Xometry 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 Donaldson with a short position of Xometry. Check out your portfolio center. Please also check ongoing floating volatility patterns of Donaldson and Xometry.
Diversification Opportunities for Donaldson and Xometry
Poor diversification
The 3 months correlation between Donaldson and Xometry is 0.7. Overlapping area represents the amount of risk that can be diversified away by holding Donaldson and Xometry in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Xometry and Donaldson 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 Donaldson are associated (or correlated) with Xometry. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Xometry has no effect on the direction of Donaldson i.e., Donaldson and Xometry go up and down completely randomly.
Pair Corralation between Donaldson and Xometry
Considering the 90-day investment horizon Donaldson is expected to generate 0.51 times more return on investment than Xometry. However, Donaldson is 1.97 times less risky than Xometry. It trades about -0.13 of its potential returns per unit of risk. Xometry is currently generating about -0.12 per unit of risk. If you would invest 6,901 in Donaldson on January 16, 2025 and sell it today you would lose (578.00) from holding Donaldson or give up 8.38% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Donaldson vs. Xometry
Performance |
| Timeline |
| Donaldson |
| Xometry |
Donaldson and Xometry Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Donaldson and Xometry
The main advantage of trading using opposite Donaldson and Xometry positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Donaldson position performs unexpectedly, Xometry 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 Xometry will offset losses from the drop in Xometry's long position.| Donaldson vs. IDEX Corporation | Donaldson vs. Watts Water Technologies | Donaldson vs. Gorman Rupp | Donaldson vs. Enerpac Tool Group |
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 Piotroski F Score module to get Piotroski F Score based on the binary analysis strategy of nine different fundamentals.
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