Correlation Between IES Holdings and Innovate Corp
Can any of the company-specific risk be diversified away by investing in both IES Holdings and Innovate Corp 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 IES Holdings and Innovate Corp into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between IES Holdings and Innovate Corp, you can compare the effects of market volatilities on IES Holdings and Innovate Corp 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 IES Holdings with a short position of Innovate Corp. Check out your portfolio center. Please also check ongoing floating volatility patterns of IES Holdings and Innovate Corp.
Diversification Opportunities for IES Holdings and Innovate Corp
-0.2 | Correlation Coefficient |
Good diversification
The 3 months correlation between IES and Innovate is -0.2. Overlapping area represents the amount of risk that can be diversified away by holding IES Holdings and Innovate Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Innovate Corp and IES Holdings 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 IES Holdings are associated (or correlated) with Innovate Corp. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Innovate Corp has no effect on the direction of IES Holdings i.e., IES Holdings and Innovate Corp go up and down completely randomly.
Pair Corralation between IES Holdings and Innovate Corp
Given the investment horizon of 90 days IES Holdings is expected to generate 0.66 times more return on investment than Innovate Corp. However, IES Holdings is 1.52 times less risky than Innovate Corp. It trades about 0.14 of its potential returns per unit of risk. Innovate Corp is currently generating about -0.01 per unit of risk. If you would invest 14,054 in IES Holdings on October 22, 2024 and sell it today you would earn a total of 11,615 from holding IES Holdings or generate 82.65% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
IES Holdings vs. Innovate Corp
Performance |
| Timeline |
| IES Holdings |
| Innovate Corp |
IES Holdings and Innovate Corp Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with IES Holdings and Innovate Corp
The main advantage of trading using opposite IES Holdings and Innovate Corp positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if IES Holdings position performs unexpectedly, Innovate Corp 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 Innovate Corp will offset losses from the drop in Innovate Corp's long position.| IES Holdings vs. EMCOR Group | IES Holdings vs. Comfort Systems USA | IES Holdings vs. Primoris Services | IES Holdings vs. Granite Construction Incorporated |
| Innovate Corp vs. Matrix Service Co | Innovate Corp vs. IES Holdings | Innovate Corp vs. MYR Group | Innovate Corp vs. Construction Partners |
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 Portfolio Suggestion module to get suggestions outside of your existing asset allocation including your own model portfolios.
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