Correlation Between Electro Optic and National Presto
Can any of the company-specific risk be diversified away by investing in both Electro Optic and National Presto 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 Electro Optic and National Presto into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Electro Optic Systems and National Presto Industries, you can compare the effects of market volatilities on Electro Optic and National Presto 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 Electro Optic with a short position of National Presto. Check out your portfolio center. Please also check ongoing floating volatility patterns of Electro Optic and National Presto.
Diversification Opportunities for Electro Optic and National Presto
-0.42 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Electro and National is -0.42. Overlapping area represents the amount of risk that can be diversified away by holding Electro Optic Systems and National Presto Industries in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on National Presto Indu and Electro Optic 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 Electro Optic Systems are associated (or correlated) with National Presto. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of National Presto Indu has no effect on the direction of Electro Optic i.e., Electro Optic and National Presto go up and down completely randomly.
Pair Corralation between Electro Optic and National Presto
Assuming the 90 days horizon Electro Optic Systems is expected to generate 3.27 times more return on investment than National Presto. However, Electro Optic is 3.27 times more volatile than National Presto Industries. It trades about 0.06 of its potential returns per unit of risk. National Presto Industries is currently generating about 0.03 per unit of risk. If you would invest 32.00 in Electro Optic Systems on September 2, 2024 and sell it today you would earn a total of 53.00 from holding Electro Optic Systems or generate 165.63% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Electro Optic Systems vs. National Presto Industries
Performance |
| Timeline |
| Electro Optic Systems |
| National Presto Indu |
Electro Optic and National Presto Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Electro Optic and National Presto
The main advantage of trading using opposite Electro Optic and National Presto positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Electro Optic position performs unexpectedly, National Presto 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 National Presto will offset losses from the drop in National Presto's long position.| Electro Optic vs. Firan Technology Group | Electro Optic vs. 808 Renewable Energy | Electro Optic vs. Park Electrochemical | Electro Optic vs. Innovative Solutions and |
| National Presto vs. Park Electrochemical | National Presto vs. Ducommun Incorporated | National Presto vs. Innovative Solutions and | National Presto vs. VSE Corporation |
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 Equity Forecasting module to use basic forecasting models to generate price predictions and determine price momentum.
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