Correlation Between Itron and Fortive Corp
Can any of the company-specific risk be diversified away by investing in both Itron and Fortive 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 Itron and Fortive Corp into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Itron Inc and Fortive Corp, you can compare the effects of market volatilities on Itron and Fortive 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 Itron with a short position of Fortive Corp. Check out your portfolio center. Please also check ongoing floating volatility patterns of Itron and Fortive Corp.
Diversification Opportunities for Itron and Fortive Corp
0.22 | Correlation Coefficient |
Modest diversification
The 3 months correlation between Itron and Fortive is 0.22. Overlapping area represents the amount of risk that can be diversified away by holding Itron Inc and Fortive Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Fortive Corp 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 Fortive Corp. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Fortive Corp has no effect on the direction of Itron i.e., Itron and Fortive Corp go up and down completely randomly.
Pair Corralation between Itron and Fortive Corp
Given the investment horizon of 90 days Itron Inc is expected to generate 1.76 times more return on investment than Fortive Corp. However, Itron is 1.76 times more volatile than Fortive Corp. It trades about 0.07 of its potential returns per unit of risk. Fortive Corp is currently generating about 0.03 per unit of risk. If you would invest 5,387 in Itron Inc on August 24, 2024 and sell it today you would earn a total of 6,250 from holding Itron Inc or generate 116.02% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 99.8% |
| Values | Daily Returns |
Itron Inc vs. Fortive Corp
Performance |
| Timeline |
| Itron Inc |
| Fortive Corp |
Itron and Fortive Corp Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Itron and Fortive Corp
The main advantage of trading using opposite Itron and Fortive Corp positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Itron position performs unexpectedly, Fortive 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 Fortive Corp will offset losses from the drop in Fortive Corp's long position.The idea behind Itron Inc and Fortive Corp 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.| Fortive Corp vs. Vishay Precision Group | Fortive Corp vs. Sensata Technologies Holding | Fortive Corp vs. Badger Meter | Fortive Corp vs. Trimble |
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 Theme Ratings module to determine theme ratings based on digital equity recommendations. Macroaxis theme ratings are based on combination of fundamental analysis and risk-adjusted market performance.
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