Correlation Between GrafTech International and Ideal Power
Can any of the company-specific risk be diversified away by investing in both GrafTech International and Ideal Power 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 GrafTech International and Ideal Power into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between GrafTech International and Ideal Power, you can compare the effects of market volatilities on GrafTech International and Ideal Power 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 GrafTech International with a short position of Ideal Power. Check out your portfolio center. Please also check ongoing floating volatility patterns of GrafTech International and Ideal Power.
Diversification Opportunities for GrafTech International and Ideal Power
-0.54 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between GrafTech and Ideal is -0.54. Overlapping area represents the amount of risk that can be diversified away by holding GrafTech International and Ideal Power in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Ideal Power and GrafTech International 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 GrafTech International are associated (or correlated) with Ideal Power. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Ideal Power has no effect on the direction of GrafTech International i.e., GrafTech International and Ideal Power go up and down completely randomly.
Pair Corralation between GrafTech International and Ideal Power
Considering the 90-day investment horizon GrafTech International is expected to generate 1.62 times more return on investment than Ideal Power. However, GrafTech International is 1.62 times more volatile than Ideal Power. It trades about 0.32 of its potential returns per unit of risk. Ideal Power is currently generating about -0.08 per unit of risk. If you would invest 65.00 in GrafTech International on August 31, 2024 and sell it today you would earn a total of 138.00 from holding GrafTech International or generate 212.31% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
GrafTech International vs. Ideal Power
Performance |
| Timeline |
| GrafTech International |
| Ideal Power |
GrafTech International and Ideal Power Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with GrafTech International and Ideal Power
The main advantage of trading using opposite GrafTech International and Ideal Power positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if GrafTech International position performs unexpectedly, Ideal Power 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 Ideal Power will offset losses from the drop in Ideal Power's long position.| GrafTech International vs. Kimball Electronics | GrafTech International vs. Hayward Holdings | GrafTech International vs. Enersys | GrafTech International vs. Espey Mfg Electronics |
| Ideal Power vs. Energizer Holdings | Ideal Power vs. Kimball Electronics | Ideal Power vs. NeoVolta Common Stock | Ideal Power vs. Espey Mfg Electronics |
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 Analyst Advice module to analyst recommendations and target price estimates broken down by several categories.
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