Correlation Between ESCO Technologies and Flexpoint Sensor
Can any of the company-specific risk be diversified away by investing in both ESCO Technologies and Flexpoint Sensor 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 ESCO Technologies and Flexpoint Sensor into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between ESCO Technologies and Flexpoint Sensor Systems, you can compare the effects of market volatilities on ESCO Technologies and Flexpoint Sensor 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 ESCO Technologies with a short position of Flexpoint Sensor. Check out your portfolio center. Please also check ongoing floating volatility patterns of ESCO Technologies and Flexpoint Sensor.
Diversification Opportunities for ESCO Technologies and Flexpoint Sensor
0.41 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between ESCO and Flexpoint is 0.41. Overlapping area represents the amount of risk that can be diversified away by holding ESCO Technologies and Flexpoint Sensor Systems in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Flexpoint Sensor Systems and ESCO Technologies 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 ESCO Technologies are associated (or correlated) with Flexpoint Sensor. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Flexpoint Sensor Systems has no effect on the direction of ESCO Technologies i.e., ESCO Technologies and Flexpoint Sensor go up and down completely randomly.
Pair Corralation between ESCO Technologies and Flexpoint Sensor
Considering the 90-day investment horizon ESCO Technologies is expected to generate 30.6 times less return on investment than Flexpoint Sensor. But when comparing it to its historical volatility, ESCO Technologies is 19.74 times less risky than Flexpoint Sensor. It trades about 0.05 of its potential returns per unit of risk. Flexpoint Sensor Systems is currently generating about 0.07 of returns per unit of risk over similar time horizon. If you would invest 0.22 in Flexpoint Sensor Systems on November 3, 2024 and sell it today you would lose (0.05) from holding Flexpoint Sensor Systems or give up 22.73% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 95.0% |
| Values | Daily Returns |
ESCO Technologies vs. Flexpoint Sensor Systems
Performance |
| Timeline |
| ESCO Technologies |
| Flexpoint Sensor Systems |
ESCO Technologies and Flexpoint Sensor Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with ESCO Technologies and Flexpoint Sensor
The main advantage of trading using opposite ESCO Technologies and Flexpoint Sensor positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if ESCO Technologies position performs unexpectedly, Flexpoint Sensor 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 Flexpoint Sensor will offset losses from the drop in Flexpoint Sensor's long position.| ESCO Technologies vs. Novanta | ESCO Technologies vs. Sono Tek Corp | ESCO Technologies vs. Itron Inc | ESCO Technologies vs. Badger Meter |
| Flexpoint Sensor vs. Electronic Sensor Technology | Flexpoint Sensor vs. 3Dx Industries | Flexpoint Sensor vs. Cavitation Techs |
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 Portfolio Analyzer module to portfolio analysis module that provides access to portfolio diagnostics and optimization engine.
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