Correlation Between Omega Flex and Taylor Devices
Can any of the company-specific risk be diversified away by investing in both Omega Flex and Taylor Devices 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 Taylor Devices into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Omega Flex and Taylor Devices, you can compare the effects of market volatilities on Omega Flex and Taylor Devices 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 Taylor Devices. Check out your portfolio center. Please also check ongoing floating volatility patterns of Omega Flex and Taylor Devices.
Diversification Opportunities for Omega Flex and Taylor Devices
0.84 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Omega and Taylor is 0.84. Overlapping area represents the amount of risk that can be diversified away by holding Omega Flex and Taylor Devices in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Taylor Devices 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 Taylor Devices. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Taylor Devices has no effect on the direction of Omega Flex i.e., Omega Flex and Taylor Devices go up and down completely randomly.
Pair Corralation between Omega Flex and Taylor Devices
Given the investment horizon of 90 days Omega Flex is expected to generate 1.78 times more return on investment than Taylor Devices. However, Omega Flex is 1.78 times more volatile than Taylor Devices. It trades about -0.08 of its potential returns per unit of risk. Taylor Devices is currently generating about -0.19 per unit of risk. If you would invest 4,130 in Omega Flex on November 4, 2024 and sell it today you would lose (194.00) from holding Omega Flex or give up 4.7% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Omega Flex vs. Taylor Devices
Performance |
| Timeline |
| Omega Flex |
| Taylor Devices |
Omega Flex and Taylor Devices Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Omega Flex and Taylor Devices
The main advantage of trading using opposite Omega Flex and Taylor Devices positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Omega Flex position performs unexpectedly, Taylor Devices 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 Taylor Devices will offset losses from the drop in Taylor Devices' long position.| Omega Flex vs. Helios Technologies | Omega Flex vs. Enpro Industries | Omega Flex vs. Luxfer Holdings PLC | Omega Flex vs. Hurco Companies |
| Taylor Devices vs. Tennant Company | Taylor Devices vs. Kadant Inc | Taylor Devices vs. Enpro Industries | Taylor Devices vs. Luxfer Holdings PLC |
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 Odds Of Bankruptcy module to get analysis of equity chance of financial distress in the next 2 years.
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