Correlation Between Itron and Applied Blockchain

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Can any of the company-specific risk be diversified away by investing in both Itron and Applied Blockchain 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 Itron and Applied Blockchain into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Itron Inc and Applied Blockchain, you can compare the effects of market volatilities on Itron and Applied Blockchain 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 Itron with a short position of Applied Blockchain. Check out your portfolio center. Please also check ongoing floating volatility patterns of Itron and Applied Blockchain.

Diversification Opportunities for Itron and Applied Blockchain

0.48
  Correlation Coefficient

Very weak diversification

The 3 months correlation between Itron and Applied is 0.48. Overlapping area represents the amount of risk that can be diversified away by holding Itron Inc and Applied Blockchain in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Applied Blockchain and Itron 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 Itron Inc are associated (or correlated) with Applied Blockchain. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Applied Blockchain has no effect on the direction of Itron i.e., Itron and Applied Blockchain go up and down completely randomly.

Pair Corralation between Itron and Applied Blockchain

Given the investment horizon of 90 days Itron is expected to generate 2.26 times less return on investment than Applied Blockchain. But when comparing it to its historical volatility, Itron Inc is 3.21 times less risky than Applied Blockchain. It trades about 0.29 of its potential returns per unit of risk. Applied Blockchain is currently generating about 0.21 of returns per unit of risk over similar time horizon. If you would invest  736.00  in Applied Blockchain on August 31, 2024 and sell it today you would earn a total of  230.00  from holding Applied Blockchain or generate 31.25% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthWeak
Accuracy100.0%
ValuesDaily Returns

Itron Inc  vs.  Applied Blockchain

 Performance 
       Timeline  
Itron Inc 

Risk-Adjusted Performance

13 of 100

 
Weak
 
Strong
OK
Compared to the overall equity markets, risk-adjusted returns on investments in Itron Inc are ranked lower than 13 (%) of all global equities and portfolios over the last 90 days. Despite fairly weak basic indicators, Itron demonstrated solid returns over the last few months and may actually be approaching a breakup point.
Applied Blockchain 

Risk-Adjusted Performance

15 of 100

 
Weak
 
Strong
Good
Compared to the overall equity markets, risk-adjusted returns on investments in Applied Blockchain are ranked lower than 15 (%) of all global equities and portfolios over the last 90 days. In spite of rather conflicting essential indicators, Applied Blockchain exhibited solid returns over the last few months and may actually be approaching a breakup point.

Itron and Applied Blockchain Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Itron and Applied Blockchain

The main advantage of trading using opposite Itron and Applied Blockchain positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Itron position performs unexpectedly, Applied Blockchain 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 Applied Blockchain will offset losses from the drop in Applied Blockchain's long position.
The idea behind Itron Inc and Applied Blockchain 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 Aroon Oscillator module to analyze current equity momentum using Aroon Oscillator and other momentum ratios.

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