Correlation Between Exponent and Innovate Corp
Can any of the company-specific risk be diversified away by investing in both Exponent and Innovate Corp 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 Exponent and Innovate Corp into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Exponent and Innovate Corp, you can compare the effects of market volatilities on Exponent and Innovate Corp 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 Exponent with a short position of Innovate Corp. Check out your portfolio center. Please also check ongoing floating volatility patterns of Exponent and Innovate Corp.
Diversification Opportunities for Exponent and Innovate Corp
-0.16 | Correlation Coefficient |
Good diversification
The 3 months correlation between Exponent and Innovate is -0.16. Overlapping area represents the amount of risk that can be diversified away by holding Exponent and Innovate Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Innovate Corp and Exponent 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 Exponent are associated (or correlated) with Innovate Corp. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Innovate Corp has no effect on the direction of Exponent i.e., Exponent and Innovate Corp go up and down completely randomly.
Pair Corralation between Exponent and Innovate Corp
Given the investment horizon of 90 days Exponent is expected to generate 0.36 times more return on investment than Innovate Corp. However, Exponent is 2.8 times less risky than Innovate Corp. It trades about -0.18 of its potential returns per unit of risk. Innovate Corp is currently generating about -0.11 per unit of risk. If you would invest 10,709 in Exponent on August 24, 2024 and sell it today you would lose (1,204) from holding Exponent or give up 11.24% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 95.65% |
| Values | Daily Returns |
Exponent vs. Innovate Corp
Performance |
| Timeline |
| Exponent |
| Innovate Corp |
Exponent and Innovate Corp Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Exponent and Innovate Corp
The main advantage of trading using opposite Exponent and Innovate Corp positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Exponent position performs unexpectedly, Innovate Corp 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 Innovate Corp will offset losses from the drop in Innovate Corp's long position.| Exponent vs. CRA International | Exponent vs. Huron Consulting Group | Exponent vs. Forrester Research | Exponent vs. Resources Connection |
| Innovate Corp vs. Matrix Service Co | Innovate Corp vs. IES Holdings | Innovate Corp vs. MYR Group | Innovate Corp vs. Construction Partners |
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 Volatility module to check portfolio volatility and analyze historical return density to properly model market risk.
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