Correlation Between Luna Innovations and Sono Tek
Can any of the company-specific risk be diversified away by investing in both Luna Innovations and Sono Tek 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 Luna Innovations and Sono Tek into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Luna Innovations Incorporated and Sono Tek Corp, you can compare the effects of market volatilities on Luna Innovations and Sono Tek 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 Luna Innovations with a short position of Sono Tek. Check out your portfolio center. Please also check ongoing floating volatility patterns of Luna Innovations and Sono Tek.
Diversification Opportunities for Luna Innovations and Sono Tek
-0.61 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Luna and Sono is -0.61. Overlapping area represents the amount of risk that can be diversified away by holding Luna Innovations Incorporated and Sono Tek Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Sono Tek Corp and Luna Innovations 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 Luna Innovations Incorporated are associated (or correlated) with Sono Tek. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Sono Tek Corp has no effect on the direction of Luna Innovations i.e., Luna Innovations and Sono Tek go up and down completely randomly.
Pair Corralation between Luna Innovations and Sono Tek
Given the investment horizon of 90 days Luna Innovations Incorporated is expected to under-perform the Sono Tek. In addition to that, Luna Innovations is 2.03 times more volatile than Sono Tek Corp. It trades about -0.06 of its total potential returns per unit of risk. Sono Tek Corp is currently generating about -0.01 per unit of volatility. If you would invest 538.00 in Sono Tek Corp on August 28, 2024 and sell it today you would lose (76.00) from holding Sono Tek Corp or give up 14.13% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 99.72% |
| Values | Daily Returns |
Luna Innovations Incorporated vs. Sono Tek Corp
Performance |
| Timeline |
| Luna Innovations |
| Sono Tek Corp |
Luna Innovations and Sono Tek Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Luna Innovations and Sono Tek
The main advantage of trading using opposite Luna Innovations and Sono Tek positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Luna Innovations position performs unexpectedly, Sono Tek 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 Sono Tek will offset losses from the drop in Sono Tek's long position.| Luna Innovations vs. ESCO Technologies | Luna Innovations vs. Know Labs | Luna Innovations vs. Focus Universal | Luna Innovations vs. Sono Tek Corp |
| Sono Tek vs. Novanta | Sono Tek vs. ESCO Technologies | Sono Tek vs. Vontier Corp | Sono Tek vs. Sensata Technologies Holding |
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 Alpha Finder module to use alpha and beta coefficients to find investment opportunities after accounting for the risk.
Other Complementary Tools
| Idea Analyzer Analyze all characteristics, volatility and risk-adjusted return of Macroaxis ideas | |
| Idea Breakdown Analyze constituents of all Macroaxis ideas. Macroaxis investment ideas are predefined, sector-focused investing themes | |
| AI Portfolio Architect Use AI to generate optimal portfolios and find profitable investment opportunities | |
| Investing Opportunities Build portfolios using our predefined set of ideas and optimize them against your investing preferences | |
| Top Crypto Exchanges Search and analyze digital assets across top global cryptocurrency exchanges |