Correlation Between Innovative Solutions and CompX International
Can any of the company-specific risk be diversified away by investing in both Innovative Solutions and CompX 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 Innovative Solutions and CompX International into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Innovative Solutions and and CompX International, you can compare the effects of market volatilities on Innovative Solutions and CompX 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 Innovative Solutions with a short position of CompX International. Check out your portfolio center. Please also check ongoing floating volatility patterns of Innovative Solutions and CompX International.
Diversification Opportunities for Innovative Solutions and CompX International
0.15 | Correlation Coefficient |
Average diversification
The 3 months correlation between Innovative and CompX is 0.15. Overlapping area represents the amount of risk that can be diversified away by holding Innovative Solutions and and CompX International in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on CompX International and Innovative Solutions 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 Innovative Solutions and are associated (or correlated) with CompX International. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of CompX International has no effect on the direction of Innovative Solutions i.e., Innovative Solutions and CompX International go up and down completely randomly.
Pair Corralation between Innovative Solutions and CompX International
Given the investment horizon of 90 days Innovative Solutions and is expected to generate 0.32 times more return on investment than CompX International. However, Innovative Solutions and is 3.14 times less risky than CompX International. It trades about 0.24 of its potential returns per unit of risk. CompX International is currently generating about -0.04 per unit of risk. If you would invest 717.00 in Innovative Solutions and on August 31, 2024 and sell it today you would earn a total of 57.00 from holding Innovative Solutions and or generate 7.95% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Innovative Solutions and vs. CompX International
Performance |
| Timeline |
| Innovative Solutions and |
| CompX International |
Innovative Solutions and CompX International Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Innovative Solutions and CompX International
The main advantage of trading using opposite Innovative Solutions and CompX International positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Innovative Solutions position performs unexpectedly, CompX 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 CompX International will offset losses from the drop in CompX International's long position.| Innovative Solutions vs. Park Electrochemical | Innovative Solutions vs. VSE Corporation | Innovative Solutions vs. Curtiss Wright | Innovative Solutions vs. Ducommun Incorporated |
| CompX International vs. NL Industries | CompX International vs. Eastern Co | CompX International vs. CF Financial | CompX International vs. Bar Harbor Bankshares |
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 Dashboard module to portfolio dashboard that provides centralized access to all your investments.
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