Correlation Between Espey Mfg and RF Industries
Can any of the company-specific risk be diversified away by investing in both Espey Mfg and RF Industries 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 RF Industries 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 RF Industries, you can compare the effects of market volatilities on Espey Mfg and RF Industries 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 RF Industries. Check out your portfolio center. Please also check ongoing floating volatility patterns of Espey Mfg and RF Industries.
Diversification Opportunities for Espey Mfg and RF Industries
0.79 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Espey and RFIL is 0.79. Overlapping area represents the amount of risk that can be diversified away by holding Espey Mfg Electronics and RF Industries in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on RF Industries 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 RF Industries. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of RF Industries has no effect on the direction of Espey Mfg i.e., Espey Mfg and RF Industries go up and down completely randomly.
Pair Corralation between Espey Mfg and RF Industries
Considering the 90-day investment horizon Espey Mfg Electronics is expected to generate 1.07 times more return on investment than RF Industries. However, Espey Mfg is 1.07 times more volatile than RF Industries. It trades about 0.11 of its potential returns per unit of risk. RF Industries is currently generating about 0.09 per unit of risk. If you would invest 2,062 in Espey Mfg Electronics on September 2, 2024 and sell it today you would earn a total of 956.00 from holding Espey Mfg Electronics or generate 46.36% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Espey Mfg Electronics vs. RF Industries
Performance |
| Timeline |
| Espey Mfg Electronics |
| RF Industries |
Espey Mfg and RF Industries Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Espey Mfg and RF Industries
The main advantage of trading using opposite Espey Mfg and RF Industries positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Espey Mfg position performs unexpectedly, RF Industries 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 RF Industries will offset losses from the drop in RF Industries' long position.| Espey Mfg vs. Chicago Rivet Machine | Espey Mfg vs. Eastern Co | Espey Mfg vs. Servotronics | Espey Mfg vs. Evans Bancorp |
| RF Industries vs. Nortech Systems Incorporated | RF Industries vs. Richardson Electronics | RF Industries vs. AstroNova |
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 Pattern Recognition module to use different Pattern Recognition models to time the market across multiple global exchanges.
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