Correlation Between Espey Mfg and Ideal Power
Can any of the company-specific risk be diversified away by investing in both Espey Mfg 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 Espey Mfg and Ideal Power into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Espey Mfg Electronics and Ideal Power, you can compare the effects of market volatilities on Espey Mfg 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 Espey Mfg with a short position of Ideal Power. Check out your portfolio center. Please also check ongoing floating volatility patterns of Espey Mfg and Ideal Power.
Diversification Opportunities for Espey Mfg and Ideal Power
-0.37 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Espey and Ideal is -0.37. Overlapping area represents the amount of risk that can be diversified away by holding Espey Mfg Electronics and Ideal Power in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Ideal Power and Espey Mfg 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 Espey Mfg Electronics 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 Espey Mfg i.e., Espey Mfg and Ideal Power go up and down completely randomly.
Pair Corralation between Espey Mfg and Ideal Power
Considering the 90-day investment horizon Espey Mfg Electronics is expected to generate 0.33 times more return on investment than Ideal Power. However, Espey Mfg Electronics is 3.01 times less risky than Ideal Power. It trades about -0.12 of its potential returns per unit of risk. Ideal Power is currently generating about -0.05 per unit of risk. If you would invest 3,103 in Espey Mfg Electronics on August 24, 2024 and sell it today you would lose (155.00) from holding Espey Mfg Electronics or give up 5.0% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Espey Mfg Electronics vs. Ideal Power
Performance |
| Timeline |
| Espey Mfg Electronics |
| Ideal Power |
Espey Mfg and Ideal Power Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Espey Mfg and Ideal Power
The main advantage of trading using opposite Espey Mfg and Ideal Power positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Espey Mfg 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.| Espey Mfg vs. Chicago Rivet Machine | Espey Mfg vs. Eastern Co | Espey Mfg vs. Servotronics | Espey Mfg vs. Evans Bancorp |
| 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 Funds Screener module to find actively-traded funds from around the world traded on over 30 global exchanges.
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