Correlation Between Flux Power and Powell Industries
Can any of the company-specific risk be diversified away by investing in both Flux Power and Powell Industries 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 Flux Power and Powell Industries into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Flux Power Holdings and Powell Industries, you can compare the effects of market volatilities on Flux Power and Powell Industries 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 Flux Power with a short position of Powell Industries. Check out your portfolio center. Please also check ongoing floating volatility patterns of Flux Power and Powell Industries.
Diversification Opportunities for Flux Power and Powell Industries
-0.59 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Flux and Powell is -0.59. Overlapping area represents the amount of risk that can be diversified away by holding Flux Power Holdings and Powell Industries in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Powell Industries and Flux Power 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 Flux Power Holdings are associated (or correlated) with Powell Industries. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Powell Industries has no effect on the direction of Flux Power i.e., Flux Power and Powell Industries go up and down completely randomly.
Pair Corralation between Flux Power and Powell Industries
Given the investment horizon of 90 days Flux Power Holdings is expected to under-perform the Powell Industries. But the stock apears to be less risky and, when comparing its historical volatility, Flux Power Holdings is 1.1 times less risky than Powell Industries. The stock trades about -0.36 of its potential returns per unit of risk. The Powell Industries is currently generating about 0.05 of returns per unit of risk over similar time horizon. If you would invest 25,418 in Powell Industries on August 31, 2024 and sell it today you would earn a total of 817.00 from holding Powell Industries or generate 3.21% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Flux Power Holdings vs. Powell Industries
Performance |
| Timeline |
| Flux Power Holdings |
| Powell Industries |
Flux Power and Powell Industries Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Flux Power and Powell Industries
The main advantage of trading using opposite Flux Power and Powell Industries positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Flux Power position performs unexpectedly, Powell Industries 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 Powell Industries will offset losses from the drop in Powell Industries' long position.| Flux Power vs. Plug Power | Flux Power vs. FREYR Battery SA | Flux Power vs. FuelCell Energy | Flux Power vs. Enovix Corp |
| Powell Industries vs. Kimball Electronics | Powell Industries vs. Hayward Holdings | Powell Industries vs. nVent Electric PLC | Powell Industries vs. Energizer Holdings |
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 My Watchlist Analysis module to analyze my current watchlist and to refresh optimization strategy. Macroaxis watchlist is based on self-learning algorithm to remember stocks you like.
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