Correlation Between ESCO Technologies and Keysight Technologies
Can any of the company-specific risk be diversified away by investing in both ESCO Technologies and Keysight 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 ESCO Technologies and Keysight Technologies into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between ESCO Technologies and Keysight Technologies, you can compare the effects of market volatilities on ESCO Technologies and Keysight 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 ESCO Technologies with a short position of Keysight Technologies. Check out your portfolio center. Please also check ongoing floating volatility patterns of ESCO Technologies and Keysight Technologies.
Diversification Opportunities for ESCO Technologies and Keysight Technologies
0.66 | Correlation Coefficient |
Poor diversification
The 3 months correlation between ESCO and Keysight is 0.66. Overlapping area represents the amount of risk that can be diversified away by holding ESCO Technologies and Keysight Technologies in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Keysight Technologies 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 Keysight Technologies. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Keysight Technologies has no effect on the direction of ESCO Technologies i.e., ESCO Technologies and Keysight Technologies go up and down completely randomly.
Pair Corralation between ESCO Technologies and Keysight Technologies
Considering the 90-day investment horizon ESCO Technologies is expected to generate 0.9 times more return on investment than Keysight Technologies. However, ESCO Technologies is 1.11 times less risky than Keysight Technologies. It trades about 0.29 of its potential returns per unit of risk. Keysight Technologies is currently generating about 0.19 per unit of risk. If you would invest 12,884 in ESCO Technologies on August 25, 2024 and sell it today you would earn a total of 2,010 from holding ESCO Technologies or generate 15.6% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
ESCO Technologies vs. Keysight Technologies
Performance |
| Timeline |
| ESCO Technologies |
| Keysight Technologies |
ESCO Technologies and Keysight Technologies Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with ESCO Technologies and Keysight Technologies
The main advantage of trading using opposite ESCO Technologies and Keysight Technologies positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if ESCO Technologies position performs unexpectedly, Keysight 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 Keysight Technologies will offset losses from the drop in Keysight Technologies' long position.| ESCO Technologies vs. Novanta | ESCO Technologies vs. Sono Tek Corp | ESCO Technologies vs. Itron Inc | ESCO Technologies vs. Badger Meter |
| Keysight Technologies vs. Focus Universal | Keysight Technologies vs. ESCO Technologies | Keysight Technologies vs. Genasys | Keysight Technologies vs. Cepton Inc |
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 Bollinger Bands module to use Bollinger Bands indicator to analyze target price for a given investing horizon.
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