Correlation Between Keyence and Fortive Corp
Can any of the company-specific risk be diversified away by investing in both Keyence 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 Keyence and Fortive Corp into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Keyence and Fortive Corp, you can compare the effects of market volatilities on Keyence 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 Keyence with a short position of Fortive Corp. Check out your portfolio center. Please also check ongoing floating volatility patterns of Keyence and Fortive Corp.
Diversification Opportunities for Keyence and Fortive Corp
0.12 | Correlation Coefficient |
Average diversification
The 3 months correlation between Keyence and Fortive is 0.12. Overlapping area represents the amount of risk that can be diversified away by holding Keyence and Fortive Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Fortive Corp and Keyence 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 Keyence 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 Keyence i.e., Keyence and Fortive Corp go up and down completely randomly.
Pair Corralation between Keyence and Fortive Corp
Assuming the 90 days horizon Keyence is expected to generate 3.57 times less return on investment than Fortive Corp. In addition to that, Keyence is 1.55 times more volatile than Fortive Corp. It trades about 0.03 of its total potential returns per unit of risk. Fortive Corp is currently generating about 0.14 per unit of volatility. If you would invest 7,502 in Fortive Corp on August 25, 2024 and sell it today you would earn a total of 340.00 from holding Fortive Corp or generate 4.53% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Keyence vs. Fortive Corp
Performance |
| Timeline |
| Keyence |
| Fortive Corp |
Keyence and Fortive Corp Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Keyence and Fortive Corp
The main advantage of trading using opposite Keyence and Fortive Corp positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Keyence 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.| Keyence vs. Fortive Corp | Keyence vs. MKS Instruments | Keyence vs. Novanta | Keyence vs. Sensata Technologies Holding |
| 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 Latest Portfolios module to quick portfolio dashboard that showcases your latest portfolios.
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