Correlation Between Microbot Medical and TEXTRON

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Can any of the company-specific risk be diversified away by investing in both Microbot Medical and TEXTRON 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 Microbot Medical and TEXTRON into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Microbot Medical and TEXTRON INC 4, you can compare the effects of market volatilities on Microbot Medical and TEXTRON 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 Microbot Medical with a short position of TEXTRON. Check out your portfolio center. Please also check ongoing floating volatility patterns of Microbot Medical and TEXTRON.

Diversification Opportunities for Microbot Medical and TEXTRON

-0.37
  Correlation Coefficient

Very good diversification

The 3 months correlation between Microbot and TEXTRON is -0.37. Overlapping area represents the amount of risk that can be diversified away by holding Microbot Medical and TEXTRON INC 4 in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on TEXTRON INC 4 and Microbot Medical 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 Microbot Medical are associated (or correlated) with TEXTRON. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of TEXTRON INC 4 has no effect on the direction of Microbot Medical i.e., Microbot Medical and TEXTRON go up and down completely randomly.

Pair Corralation between Microbot Medical and TEXTRON

Given the investment horizon of 90 days Microbot Medical is expected to generate 18.75 times more return on investment than TEXTRON. However, Microbot Medical is 18.75 times more volatile than TEXTRON INC 4. It trades about 0.15 of its potential returns per unit of risk. TEXTRON INC 4 is currently generating about 0.03 per unit of risk. If you would invest  93.00  in Microbot Medical on September 5, 2024 and sell it today you would earn a total of  8.00  from holding Microbot Medical or generate 8.6% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Against 
StrengthInsignificant
Accuracy86.36%
ValuesDaily Returns

Microbot Medical  vs.  TEXTRON INC 4

 Performance 
       Timeline  
Microbot Medical 

Risk-Adjusted Performance

7 of 100

 
Weak
 
Strong
OK
Compared to the overall equity markets, risk-adjusted returns on investments in Microbot Medical are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively unsteady basic indicators, Microbot Medical unveiled solid returns over the last few months and may actually be approaching a breakup point.
TEXTRON INC 4 

Risk-Adjusted Performance

0 of 100

 
Weak
 
Strong
Very Weak
Over the last 90 days TEXTRON INC 4 has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong basic indicators, TEXTRON is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Microbot Medical and TEXTRON Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Microbot Medical and TEXTRON

The main advantage of trading using opposite Microbot Medical and TEXTRON positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Microbot Medical position performs unexpectedly, TEXTRON 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 TEXTRON will offset losses from the drop in TEXTRON's long position.
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The idea behind Microbot Medical and TEXTRON INC 4 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.
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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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