Correlation Between Flowserve and Tennant
Can any of the company-specific risk be diversified away by investing in both Flowserve and Tennant 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 Tennant into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Flowserve and Tennant Company, you can compare the effects of market volatilities on Flowserve and Tennant 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 Tennant. Check out your portfolio center. Please also check ongoing floating volatility patterns of Flowserve and Tennant.
Diversification Opportunities for Flowserve and Tennant
Weak diversification
The 3 months correlation between Flowserve and Tennant is 0.36. Overlapping area represents the amount of risk that can be diversified away by holding Flowserve and Tennant Company in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Tennant Company 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 Tennant. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Tennant Company has no effect on the direction of Flowserve i.e., Flowserve and Tennant go up and down completely randomly.
Pair Corralation between Flowserve and Tennant
Considering the 90-day investment horizon Flowserve is expected to generate 0.96 times more return on investment than Tennant. However, Flowserve is 1.05 times less risky than Tennant. It trades about 0.12 of its potential returns per unit of risk. Tennant Company is currently generating about 0.0 per unit of risk. If you would invest 3,946 in Flowserve on November 9, 2024 and sell it today you would earn a total of 2,389 from holding Flowserve or generate 60.54% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Flowserve vs. Tennant Company
Performance |
| Timeline |
| Flowserve |
| Tennant Company |
Flowserve and Tennant Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Flowserve and Tennant
The main advantage of trading using opposite Flowserve and Tennant positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Flowserve position performs unexpectedly, Tennant 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 Tennant will offset losses from the drop in Tennant's long position.| Flowserve vs. IDEX Corporation | Flowserve vs. Donaldson | Flowserve vs. Ingersoll Rand | Flowserve vs. Franklin Electric Co |
| Tennant vs. Franklin Electric Co | Tennant vs. Omega Flex | Tennant vs. Luxfer Holdings PLC | Tennant vs. Kadant Inc |
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 Companies Directory module to evaluate performance of over 100,000 Stocks, Funds, and ETFs against different fundamentals.
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