Correlation Between FARO Technologies and USA Recycling
Can any of the company-specific risk be diversified away by investing in both FARO Technologies and USA Recycling 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 FARO Technologies and USA Recycling into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between FARO Technologies and USA Recycling Industries, you can compare the effects of market volatilities on FARO Technologies and USA Recycling 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 FARO Technologies with a short position of USA Recycling. Check out your portfolio center. Please also check ongoing floating volatility patterns of FARO Technologies and USA Recycling.
Diversification Opportunities for FARO Technologies and USA Recycling
-0.45 | Correlation Coefficient |
Very good diversification
The 3 months correlation between FARO and USA is -0.45. Overlapping area represents the amount of risk that can be diversified away by holding FARO Technologies and USA Recycling Industries in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on USA Recycling Industries and FARO 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 FARO Technologies are associated (or correlated) with USA Recycling. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of USA Recycling Industries has no effect on the direction of FARO Technologies i.e., FARO Technologies and USA Recycling go up and down completely randomly.
Pair Corralation between FARO Technologies and USA Recycling
Given the investment horizon of 90 days FARO Technologies is expected to generate 0.1 times more return on investment than USA Recycling. However, FARO Technologies is 10.38 times less risky than USA Recycling. It trades about 0.06 of its potential returns per unit of risk. USA Recycling Industries is currently generating about -0.21 per unit of risk. If you would invest 2,677 in FARO Technologies on September 14, 2024 and sell it today you would earn a total of 57.00 from holding FARO Technologies or generate 2.13% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
FARO Technologies vs. USA Recycling Industries
Performance |
| Timeline |
| FARO Technologies |
| USA Recycling Industries |
FARO Technologies and USA Recycling Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with FARO Technologies and USA Recycling
The main advantage of trading using opposite FARO Technologies and USA Recycling positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if FARO Technologies position performs unexpectedly, USA Recycling 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 USA Recycling will offset losses from the drop in USA Recycling's long position.| FARO Technologies vs. Mesa Laboratories | FARO Technologies vs. Itron Inc | FARO Technologies vs. Fortive Corp | FARO Technologies vs. Vishay Precision Group |
| USA Recycling vs. Radcom | USA Recycling vs. Sonida Senior Living | USA Recycling vs. Xtant Medical Holdings | USA Recycling vs. FARO Technologies |
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 Manager module to state of the art Portfolio Manager to monitor and improve performance of your invested capital.
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