Correlation Between Flowserve and Rockwell Automation
Can any of the company-specific risk be diversified away by investing in both Flowserve and Rockwell Automation 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 Rockwell Automation into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Flowserve and Rockwell Automation, you can compare the effects of market volatilities on Flowserve and Rockwell Automation 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 Rockwell Automation. Check out your portfolio center. Please also check ongoing floating volatility patterns of Flowserve and Rockwell Automation.
Diversification Opportunities for Flowserve and Rockwell Automation
0.86 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Flowserve and Rockwell is 0.86. Overlapping area represents the amount of risk that can be diversified away by holding Flowserve and Rockwell Automation in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Rockwell Automation 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 Rockwell Automation. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Rockwell Automation has no effect on the direction of Flowserve i.e., Flowserve and Rockwell Automation go up and down completely randomly.
Pair Corralation between Flowserve and Rockwell Automation
Considering the 90-day investment horizon Flowserve is expected to generate 0.74 times more return on investment than Rockwell Automation. However, Flowserve is 1.36 times less risky than Rockwell Automation. It trades about 0.33 of its potential returns per unit of risk. Rockwell Automation is currently generating about 0.14 per unit of risk. If you would invest 5,294 in Flowserve on August 27, 2024 and sell it today you would earn a total of 806.00 from holding Flowserve or generate 15.22% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Flowserve vs. Rockwell Automation
Performance |
| Timeline |
| Flowserve |
| Rockwell Automation |
Flowserve and Rockwell Automation Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Flowserve and Rockwell Automation
The main advantage of trading using opposite Flowserve and Rockwell Automation positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Flowserve position performs unexpectedly, Rockwell Automation 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 Rockwell Automation will offset losses from the drop in Rockwell Automation's 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 Portfolio Holdings module to check your current holdings and cash postion to detemine if your portfolio needs rebalancing.
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