Correlation Between Omega Flex and Gates Industrial
Can any of the company-specific risk be diversified away by investing in both Omega Flex and Gates Industrial 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 Gates Industrial into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Omega Flex and Gates Industrial, you can compare the effects of market volatilities on Omega Flex and Gates Industrial 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 Gates Industrial. Check out your portfolio center. Please also check ongoing floating volatility patterns of Omega Flex and Gates Industrial.
Diversification Opportunities for Omega Flex and Gates Industrial
0.2 | Correlation Coefficient |
Modest diversification
The 3 months correlation between Omega and Gates is 0.2. Overlapping area represents the amount of risk that can be diversified away by holding Omega Flex and Gates Industrial in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Gates Industrial 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 Gates Industrial. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Gates Industrial has no effect on the direction of Omega Flex i.e., Omega Flex and Gates Industrial go up and down completely randomly.
Pair Corralation between Omega Flex and Gates Industrial
Given the investment horizon of 90 days Omega Flex is expected to under-perform the Gates Industrial. But the stock apears to be less risky and, when comparing its historical volatility, Omega Flex is 1.17 times less risky than Gates Industrial. The stock trades about -0.11 of its potential returns per unit of risk. The Gates Industrial is currently generating about 0.01 of returns per unit of risk over similar time horizon. If you would invest 1,640 in Gates Industrial on January 7, 2025 and sell it today you would lose (36.00) from holding Gates Industrial or give up 2.2% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Omega Flex vs. Gates Industrial
Performance |
| Timeline |
| Omega Flex |
| Gates Industrial |
Omega Flex and Gates Industrial Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Omega Flex and Gates Industrial
The main advantage of trading using opposite Omega Flex and Gates Industrial positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Omega Flex position performs unexpectedly, Gates Industrial 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 Gates Industrial will offset losses from the drop in Gates Industrial's long position.| Omega Flex vs. Helios Technologies | Omega Flex vs. Enpro Industries | Omega Flex vs. Luxfer Holdings PLC | Omega Flex vs. Hurco Companies |
| Gates Industrial vs. Crane NXT Co | Gates Industrial vs. Donaldson | Gates Industrial vs. ITT Inc | Gates Industrial vs. Franklin Electric Co |
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 Balance Of Power module to check stock momentum by analyzing Balance Of Power indicator and other technical ratios.
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