Correlation Between Flexsteel Industries and Dana
Can any of the company-specific risk be diversified away by investing in both Flexsteel Industries and Dana 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 Flexsteel Industries and Dana into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Flexsteel Industries and Dana Inc, you can compare the effects of market volatilities on Flexsteel Industries and Dana 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 Flexsteel Industries with a short position of Dana. Check out your portfolio center. Please also check ongoing floating volatility patterns of Flexsteel Industries and Dana.
Diversification Opportunities for Flexsteel Industries and Dana
-0.75 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between Flexsteel and Dana is -0.75. Overlapping area represents the amount of risk that can be diversified away by holding Flexsteel Industries and Dana Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Dana Inc and Flexsteel Industries 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 Flexsteel Industries are associated (or correlated) with Dana. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Dana Inc has no effect on the direction of Flexsteel Industries i.e., Flexsteel Industries and Dana go up and down completely randomly.
Pair Corralation between Flexsteel Industries and Dana
Given the investment horizon of 90 days Flexsteel Industries is expected to generate 0.47 times more return on investment than Dana. However, Flexsteel Industries is 2.15 times less risky than Dana. It trades about 0.02 of its potential returns per unit of risk. Dana Inc is currently generating about -0.11 per unit of risk. If you would invest 5,888 in Flexsteel Industries on August 24, 2024 and sell it today you would earn a total of 13.00 from holding Flexsteel Industries or generate 0.22% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Flexsteel Industries vs. Dana Inc
Performance |
| Timeline |
| Flexsteel Industries |
| Dana Inc |
Flexsteel Industries and Dana Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Flexsteel Industries and Dana
The main advantage of trading using opposite Flexsteel Industries and Dana positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Flexsteel Industries position performs unexpectedly, Dana 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 Dana will offset losses from the drop in Dana's long position.The idea behind Flexsteel Industries and Dana Inc pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.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 Equity Search module to search for actively traded equities including funds and ETFs from over 30 global markets.
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