Correlation Between DXP Enterprises and TTM Technologies
Can any of the company-specific risk be diversified away by investing in both DXP Enterprises and TTM 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 DXP Enterprises and TTM Technologies into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between DXP Enterprises and TTM Technologies, you can compare the effects of market volatilities on DXP Enterprises and TTM 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 DXP Enterprises with a short position of TTM Technologies. Check out your portfolio center. Please also check ongoing floating volatility patterns of DXP Enterprises and TTM Technologies.
Diversification Opportunities for DXP Enterprises and TTM Technologies
0.86 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between DXP and TTM is 0.86. Overlapping area represents the amount of risk that can be diversified away by holding DXP Enterprises and TTM Technologies in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on TTM Technologies and DXP Enterprises 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 DXP Enterprises are associated (or correlated) with TTM Technologies. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of TTM Technologies has no effect on the direction of DXP Enterprises i.e., DXP Enterprises and TTM Technologies go up and down completely randomly.
Pair Corralation between DXP Enterprises and TTM Technologies
Given the investment horizon of 90 days DXP Enterprises is expected to generate 1.33 times more return on investment than TTM Technologies. However, DXP Enterprises is 1.33 times more volatile than TTM Technologies. It trades about 0.39 of its potential returns per unit of risk. TTM Technologies is currently generating about 0.26 per unit of risk. If you would invest 4,937 in DXP Enterprises on August 28, 2024 and sell it today you would earn a total of 2,353 from holding DXP Enterprises or generate 47.66% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
DXP Enterprises vs. TTM Technologies
Performance |
| Timeline |
| DXP Enterprises |
| TTM Technologies |
DXP Enterprises and TTM Technologies Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with DXP Enterprises and TTM Technologies
The main advantage of trading using opposite DXP Enterprises and TTM Technologies positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if DXP Enterprises position performs unexpectedly, TTM 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 TTM Technologies will offset losses from the drop in TTM Technologies' long position.| DXP Enterprises vs. Global Industrial Co | DXP Enterprises vs. WESCO International | DXP Enterprises vs. MSC Industrial Direct |
| TTM Technologies vs. Sanmina | TTM Technologies vs. Benchmark Electronics | TTM Technologies vs. Methode Electronics | TTM Technologies vs. OSI Systems |
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 Volatility Analysis module to get historical volatility and risk analysis based on latest market data.
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