Correlation Between Momentive Global and IDEX Biometrics
Can any of the company-specific risk be diversified away by investing in both Momentive Global and IDEX Biometrics 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 Momentive Global and IDEX Biometrics into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Momentive Global and IDEX Biometrics ASA, you can compare the effects of market volatilities on Momentive Global and IDEX Biometrics 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 Momentive Global with a short position of IDEX Biometrics. Check out your portfolio center. Please also check ongoing floating volatility patterns of Momentive Global and IDEX Biometrics.
Diversification Opportunities for Momentive Global and IDEX Biometrics
0.8 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Momentive and IDEX is 0.8. Overlapping area represents the amount of risk that can be diversified away by holding Momentive Global and IDEX Biometrics ASA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on IDEX Biometrics ASA and Momentive Global 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 Momentive Global are associated (or correlated) with IDEX Biometrics. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of IDEX Biometrics ASA has no effect on the direction of Momentive Global i.e., Momentive Global and IDEX Biometrics go up and down completely randomly.
Pair Corralation between Momentive Global and IDEX Biometrics
Given the investment horizon of 90 days Momentive Global is expected to generate 3.58 times less return on investment than IDEX Biometrics. But when comparing it to its historical volatility, Momentive Global is 3.27 times less risky than IDEX Biometrics. It trades about 0.09 of its potential returns per unit of risk. IDEX Biometrics ASA is currently generating about 0.1 of returns per unit of risk over similar time horizon. If you would invest 6.00 in IDEX Biometrics ASA on August 28, 2024 and sell it today you would earn a total of 11.00 from holding IDEX Biometrics ASA or generate 183.33% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 81.53% |
| Values | Daily Returns |
Momentive Global vs. IDEX Biometrics ASA
Performance |
| Timeline |
| Momentive Global |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Very Weak
| IDEX Biometrics ASA |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Very Weak
Momentive Global and IDEX Biometrics Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Momentive Global and IDEX Biometrics
The main advantage of trading using opposite Momentive Global and IDEX Biometrics positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Momentive Global position performs unexpectedly, IDEX Biometrics 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 IDEX Biometrics will offset losses from the drop in IDEX Biometrics' long position.| Momentive Global vs. PROS Holdings | Momentive Global vs. Meridianlink | Momentive Global vs. Enfusion | Momentive Global vs. Clearwater Analytics Holdings |
| IDEX Biometrics vs. Issuer Direct Corp | IDEX Biometrics vs. eGain | IDEX Biometrics vs. Research Solutions | IDEX Biometrics vs. Ackroo Inc |
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 Cryptocurrency Center module to build and monitor diversified portfolio of extremely risky digital assets and cryptocurrency.
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