Correlation Between Flex and Murata Manufacturing
Can any of the company-specific risk be diversified away by investing in both Flex and Murata Manufacturing 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 Flex and Murata Manufacturing into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Flex and Murata Manufacturing, you can compare the effects of market volatilities on Flex and Murata Manufacturing 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 Flex with a short position of Murata Manufacturing. Check out your portfolio center. Please also check ongoing floating volatility patterns of Flex and Murata Manufacturing.
Diversification Opportunities for Flex and Murata Manufacturing
-0.76 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between Flex and Murata is -0.76. Overlapping area represents the amount of risk that can be diversified away by holding Flex and Murata Manufacturing in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Murata Manufacturing and Flex 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 Flex are associated (or correlated) with Murata Manufacturing. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Murata Manufacturing has no effect on the direction of Flex i.e., Flex and Murata Manufacturing go up and down completely randomly.
Pair Corralation between Flex and Murata Manufacturing
Given the investment horizon of 90 days Flex is expected to generate 1.19 times more return on investment than Murata Manufacturing. However, Flex is 1.19 times more volatile than Murata Manufacturing. It trades about 0.1 of its potential returns per unit of risk. Murata Manufacturing is currently generating about -0.04 per unit of risk. If you would invest 2,815 in Flex on August 27, 2024 and sell it today you would earn a total of 1,315 from holding Flex or generate 46.71% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Flex vs. Murata Manufacturing
Performance |
| Timeline |
| Flex |
| Murata Manufacturing |
Flex and Murata Manufacturing Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Flex and Murata Manufacturing
The main advantage of trading using opposite Flex and Murata Manufacturing positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Flex position performs unexpectedly, Murata Manufacturing 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 Murata Manufacturing will offset losses from the drop in Murata Manufacturing's long position.The idea behind Flex and Murata Manufacturing pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.| Murata Manufacturing vs. Celestica | Murata Manufacturing vs. Flex | Murata Manufacturing vs. OSI Systems | Murata Manufacturing vs. Data IO |
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 ETFs module to find actively traded Exchange Traded Funds (ETF) from around the world.
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