Correlation Between Itron and Syntec Optics

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

Diversification Opportunities for Itron and Syntec Optics

-0.41
  Correlation Coefficient

Very good diversification

The 3 months correlation between Itron and Syntec is -0.41. Overlapping area represents the amount of risk that can be diversified away by holding Itron Inc and Syntec Optics Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Syntec Optics Holdings 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 Syntec Optics. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Syntec Optics Holdings has no effect on the direction of Itron i.e., Itron and Syntec Optics go up and down completely randomly.

Pair Corralation between Itron and Syntec Optics

Given the investment horizon of 90 days Itron Inc is expected to generate 0.11 times more return on investment than Syntec Optics. However, Itron Inc is 8.71 times less risky than Syntec Optics. It trades about -0.08 of its potential returns per unit of risk. Syntec Optics Holdings is currently generating about -0.17 per unit of risk. If you would invest  11,036  in Itron Inc on October 26, 2024 and sell it today you would lose (227.00) from holding Itron Inc or give up 2.06% of portfolio value over 90 days.
Time Period3 Months [change]
DirectionMoves Against 
StrengthVery Weak
Accuracy100.0%
ValuesDaily Returns

Itron Inc  vs.  Syntec Optics Holdings

 Performance 
       Timeline  
Itron Inc 

Risk-Adjusted Performance

3 of 100

 
Weak
 
Strong
Insignificant
Compared to the overall equity markets, risk-adjusted returns on investments in Itron Inc are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. Despite fairly strong basic indicators, Itron is not utilizing all of its potentials. The latest stock price confusion, may contribute to short-horizon losses for the traders.
Syntec Optics Holdings 

Risk-Adjusted Performance

8 of 100

 
Weak
 
Strong
OK
Compared to the overall equity markets, risk-adjusted returns on investments in Syntec Optics Holdings are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. In spite of fairly unfluctuating basic indicators, Syntec Optics showed solid returns over the last few months and may actually be approaching a breakup point.

Itron and Syntec Optics Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Itron and Syntec Optics

The main advantage of trading using opposite Itron and Syntec Optics positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Itron position performs unexpectedly, Syntec Optics 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 Syntec Optics will offset losses from the drop in Syntec Optics' long position.
The idea behind Itron Inc and Syntec Optics Holdings 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 Risk-Return Analysis module to view associations between returns expected from investment and the risk you assume.

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