Correlation Between ESCO Technologies and Track
Can any of the company-specific risk be diversified away by investing in both ESCO Technologies and Track 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 Track into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between ESCO Technologies and Track Group, you can compare the effects of market volatilities on ESCO Technologies and Track 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 Track. Check out your portfolio center. Please also check ongoing floating volatility patterns of ESCO Technologies and Track.
Diversification Opportunities for ESCO Technologies and Track
-0.56 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between ESCO and Track is -0.56. Overlapping area represents the amount of risk that can be diversified away by holding ESCO Technologies and Track Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Track Group 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 Track. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Track Group has no effect on the direction of ESCO Technologies i.e., ESCO Technologies and Track go up and down completely randomly.
Pair Corralation between ESCO Technologies and Track
Considering the 90-day investment horizon ESCO Technologies is expected to generate 1.78 times less return on investment than Track. But when comparing it to its historical volatility, ESCO Technologies is 5.47 times less risky than Track. It trades about 0.07 of its potential returns per unit of risk. Track Group is currently generating about 0.02 of returns per unit of risk over similar time horizon. If you would invest 40.00 in Track Group on August 28, 2024 and sell it today you would lose (25.00) from holding Track Group or give up 62.5% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
ESCO Technologies vs. Track Group
Performance |
| Timeline |
| ESCO Technologies |
| Track Group |
ESCO Technologies and Track Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with ESCO Technologies and Track
The main advantage of trading using opposite ESCO Technologies and Track positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if ESCO Technologies position performs unexpectedly, Track 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 Track will offset losses from the drop in Track's long position.| ESCO Technologies vs. Novanta | ESCO Technologies vs. Sono Tek Corp | ESCO Technologies vs. Itron Inc | ESCO Technologies vs. Badger Meter |
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 Search module to search for actively traded equities including funds and ETFs from over 30 global markets.
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