Correlation Between Flowserve and Generac Holdings
Can any of the company-specific risk be diversified away by investing in both Flowserve and Generac Holdings 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 Generac Holdings into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Flowserve and Generac Holdings, you can compare the effects of market volatilities on Flowserve and Generac Holdings 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 Generac Holdings. Check out your portfolio center. Please also check ongoing floating volatility patterns of Flowserve and Generac Holdings.
Diversification Opportunities for Flowserve and Generac Holdings
0.96 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between Flowserve and Generac is 0.96. Overlapping area represents the amount of risk that can be diversified away by holding Flowserve and Generac Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Generac Holdings 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 Generac Holdings. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Generac Holdings has no effect on the direction of Flowserve i.e., Flowserve and Generac Holdings go up and down completely randomly.
Pair Corralation between Flowserve and Generac Holdings
Considering the 90-day investment horizon Flowserve is expected to generate 1.14 times less return on investment than Generac Holdings. But when comparing it to its historical volatility, Flowserve is 1.77 times less risky than Generac Holdings. It trades about 0.1 of its potential returns per unit of risk. Generac Holdings is currently generating about 0.06 of returns per unit of risk over similar time horizon. If you would invest 9,429 in Generac Holdings on August 27, 2024 and sell it today you would earn a total of 9,479 from holding Generac Holdings or generate 100.53% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Flowserve vs. Generac Holdings
Performance |
| Timeline |
| Flowserve |
| Generac Holdings |
Flowserve and Generac Holdings Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Flowserve and Generac Holdings
The main advantage of trading using opposite Flowserve and Generac Holdings positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Flowserve position performs unexpectedly, Generac Holdings 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 Generac Holdings will offset losses from the drop in Generac Holdings' long position.| Flowserve vs. Aquagold International | Flowserve vs. Morningstar Unconstrained Allocation | Flowserve vs. High Yield Municipal Fund | Flowserve vs. Thrivent High Yield |
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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 Funds Screener module to find actively-traded funds from around the world traded on over 30 global exchanges.
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