Correlation Between Flowserve and Dover
Can any of the company-specific risk be diversified away by investing in both Flowserve and Dover 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 Flowserve and Dover into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Flowserve and Dover, you can compare the effects of market volatilities on Flowserve and Dover 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 Flowserve with a short position of Dover. Check out your portfolio center. Please also check ongoing floating volatility patterns of Flowserve and Dover.
Diversification Opportunities for Flowserve and Dover
Very poor diversification
The 3 months correlation between Flowserve and Dover is 0.89. Overlapping area represents the amount of risk that can be diversified away by holding Flowserve and Dover in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Dover and Flowserve 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 Flowserve are associated (or correlated) with Dover. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Dover has no effect on the direction of Flowserve i.e., Flowserve and Dover go up and down completely randomly.
Pair Corralation between Flowserve and Dover
Considering the 90-day investment horizon Flowserve is expected to generate 1.15 times more return on investment than Dover. However, Flowserve is 1.15 times more volatile than Dover. It trades about 0.28 of its potential returns per unit of risk. Dover is currently generating about 0.14 per unit of risk. If you would invest 5,300 in Flowserve on August 24, 2024 and sell it today you would earn a total of 705.00 from holding Flowserve or generate 13.3% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Flowserve vs. Dover
Performance |
| Timeline |
| Flowserve |
| Dover |
Flowserve and Dover Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Flowserve and Dover
The main advantage of trading using opposite Flowserve and Dover positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Flowserve position performs unexpectedly, Dover 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 Dover will offset losses from the drop in Dover's long position.| Flowserve vs. Pentair PLC | Flowserve vs. Parker Hannifin | Flowserve vs. Emerson Electric | Flowserve vs. Smith AO |
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 Price Exposure Probability module to analyze equity upside and downside potential for a given time horizon across multiple markets.
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