Correlation Between Omega Flex and CSW Industrials
Can any of the company-specific risk be diversified away by investing in both Omega Flex and CSW Industrials 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 Omega Flex and CSW Industrials into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Omega Flex and CSW Industrials, you can compare the effects of market volatilities on Omega Flex and CSW Industrials 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 Omega Flex with a short position of CSW Industrials. Check out your portfolio center. Please also check ongoing floating volatility patterns of Omega Flex and CSW Industrials.
Diversification Opportunities for Omega Flex and CSW Industrials
0.73 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Omega and CSW is 0.73. Overlapping area represents the amount of risk that can be diversified away by holding Omega Flex and CSW Industrials in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on CSW Industrials and Omega Flex 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 Omega Flex are associated (or correlated) with CSW Industrials. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of CSW Industrials has no effect on the direction of Omega Flex i.e., Omega Flex and CSW Industrials go up and down completely randomly.
Pair Corralation between Omega Flex and CSW Industrials
Given the investment horizon of 90 days Omega Flex is expected to generate 3.97 times less return on investment than CSW Industrials. But when comparing it to its historical volatility, Omega Flex is 1.19 times less risky than CSW Industrials. It trades about 0.05 of its potential returns per unit of risk. CSW Industrials is currently generating about 0.18 of returns per unit of risk over similar time horizon. If you would invest 32,625 in CSW Industrials on August 26, 2024 and sell it today you would earn a total of 10,041 from holding CSW Industrials or generate 30.78% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Omega Flex vs. CSW Industrials
Performance |
| Timeline |
| Omega Flex |
| CSW Industrials |
Omega Flex and CSW Industrials Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Omega Flex and CSW Industrials
The main advantage of trading using opposite Omega Flex and CSW Industrials positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Omega Flex position performs unexpectedly, CSW Industrials 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 CSW Industrials will offset losses from the drop in CSW Industrials' long position.| Omega Flex vs. Helios Technologies | Omega Flex vs. Enpro Industries | Omega Flex vs. Luxfer Holdings PLC | Omega Flex vs. Hurco Companies |
| CSW Industrials vs. Enerpac Tool Group | CSW Industrials vs. Luxfer Holdings PLC | CSW Industrials vs. John Bean Technologies | CSW Industrials vs. ITT 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 Global Correlations module to find global opportunities by holding instruments from different markets.
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