Correlation Between Flowserve and TPI Composites
Can any of the company-specific risk be diversified away by investing in both Flowserve and TPI Composites 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 TPI Composites into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Flowserve and TPI Composites, you can compare the effects of market volatilities on Flowserve and TPI Composites 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 TPI Composites. Check out your portfolio center. Please also check ongoing floating volatility patterns of Flowserve and TPI Composites.
Diversification Opportunities for Flowserve and TPI Composites
-0.7 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Flowserve and TPI is -0.7. Overlapping area represents the amount of risk that can be diversified away by holding Flowserve and TPI Composites in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on TPI Composites 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 TPI Composites. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of TPI Composites has no effect on the direction of Flowserve i.e., Flowserve and TPI Composites go up and down completely randomly.
Pair Corralation between Flowserve and TPI Composites
Considering the 90-day investment horizon Flowserve is expected to generate 0.28 times more return on investment than TPI Composites. However, Flowserve is 3.54 times less risky than TPI Composites. It trades about 0.32 of its potential returns per unit of risk. TPI Composites is currently generating about -0.31 per unit of risk. If you would invest 5,354 in Flowserve on September 2, 2024 and sell it today you would earn a total of 748.00 from holding Flowserve or generate 13.97% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Flowserve vs. TPI Composites
Performance |
| Timeline |
| Flowserve |
| TPI Composites |
Flowserve and TPI Composites Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Flowserve and TPI Composites
The main advantage of trading using opposite Flowserve and TPI Composites positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Flowserve position performs unexpectedly, TPI Composites 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 TPI Composites will offset losses from the drop in TPI Composites' long position.| Flowserve vs. IDEX Corporation | Flowserve vs. Donaldson | Flowserve vs. Ingersoll Rand | Flowserve vs. Franklin Electric Co |
| TPI Composites vs. Babcock Wilcox Enterprises | TPI Composites vs. Franklin Electric Co | TPI Composites vs. Crane Company | TPI Composites vs. Luxfer Holdings PLC |
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 Fundamentals Comparison module to compare fundamentals across multiple equities to find investing opportunities.
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