Correlation Between Graco and Standex International
Can any of the company-specific risk be diversified away by investing in both Graco and Standex International 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 Graco and Standex International into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Graco Inc and Standex International, you can compare the effects of market volatilities on Graco and Standex International 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 Graco with a short position of Standex International. Check out your portfolio center. Please also check ongoing floating volatility patterns of Graco and Standex International.
Diversification Opportunities for Graco and Standex International
0.81 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Graco and Standex is 0.81. Overlapping area represents the amount of risk that can be diversified away by holding Graco Inc and Standex International in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Standex International and Graco 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 Graco Inc are associated (or correlated) with Standex International. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Standex International has no effect on the direction of Graco i.e., Graco and Standex International go up and down completely randomly.
Pair Corralation between Graco and Standex International
Considering the 90-day investment horizon Graco is expected to generate 9.46 times less return on investment than Standex International. But when comparing it to its historical volatility, Graco Inc is 1.51 times less risky than Standex International. It trades about 0.01 of its potential returns per unit of risk. Standex International is currently generating about 0.06 of returns per unit of risk over similar time horizon. If you would invest 17,213 in Standex International on August 27, 2024 and sell it today you would earn a total of 3,249 from holding Standex International or generate 18.88% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Graco Inc vs. Standex International
Performance |
| Timeline |
| Graco Inc |
| Standex International |
Graco and Standex International Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Graco and Standex International
The main advantage of trading using opposite Graco and Standex International positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Graco position performs unexpectedly, Standex International 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 Standex International will offset losses from the drop in Standex International's long position.| Graco vs. Aquagold International | Graco vs. Morningstar Unconstrained Allocation | Graco vs. High Yield Municipal Fund | Graco vs. Thrivent High Yield |
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 FinTech Suite module to use AI to screen and filter profitable investment opportunities.
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