Correlation Between Imaflex and Current Water
Can any of the company-specific risk be diversified away by investing in both Imaflex and Current Water 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 Imaflex and Current Water into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Imaflex and Current Water Technologies, you can compare the effects of market volatilities on Imaflex and Current Water 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 Imaflex with a short position of Current Water. Check out your portfolio center. Please also check ongoing floating volatility patterns of Imaflex and Current Water.
Diversification Opportunities for Imaflex and Current Water
-0.1 | Correlation Coefficient |
Good diversification
The 3 months correlation between Imaflex and Current is -0.1. Overlapping area represents the amount of risk that can be diversified away by holding Imaflex and Current Water Technologies in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Current Water Techno and Imaflex 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 Imaflex are associated (or correlated) with Current Water. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Current Water Techno has no effect on the direction of Imaflex i.e., Imaflex and Current Water go up and down completely randomly.
Pair Corralation between Imaflex and Current Water
Assuming the 90 days horizon Imaflex is expected to generate 9.72 times less return on investment than Current Water. But when comparing it to its historical volatility, Imaflex is 4.12 times less risky than Current Water. It trades about 0.03 of its potential returns per unit of risk. Current Water Technologies is currently generating about 0.06 of returns per unit of risk over similar time horizon. If you would invest 3.00 in Current Water Technologies on September 1, 2024 and sell it today you would earn a total of 0.00 from holding Current Water Technologies or generate 0.0% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Imaflex vs. Current Water Technologies
Performance |
| Timeline |
| Imaflex |
| Current Water Techno |
Imaflex and Current Water Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Imaflex and Current Water
The main advantage of trading using opposite Imaflex and Current Water positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Imaflex position performs unexpectedly, Current Water 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 Current Water will offset losses from the drop in Current Water's long position.| Imaflex vs. AirIQ Inc | Imaflex vs. NamSys Inc | Imaflex vs. Supremex | Imaflex vs. Atlas Engineered Products |
| Current Water vs. Firan Technology Group | Current Water vs. Baylin Technologies | Current Water vs. iShares Canadian HYBrid | Current Water vs. Altagas Cum Red |
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 Odds Of Bankruptcy module to get analysis of equity chance of financial distress in the next 2 years.
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