Correlation Between Omega Flex and Watts Water
Can any of the company-specific risk be diversified away by investing in both Omega Flex and Watts Water 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 Watts Water into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Omega Flex and Watts Water Technologies, you can compare the effects of market volatilities on Omega Flex and Watts Water 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 Watts Water. Check out your portfolio center. Please also check ongoing floating volatility patterns of Omega Flex and Watts Water.
Diversification Opportunities for Omega Flex and Watts Water
0.34 | Correlation Coefficient |
Weak diversification
The 3 months correlation between Omega and Watts is 0.34. Overlapping area represents the amount of risk that can be diversified away by holding Omega Flex and Watts Water Technologies in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Watts Water Technologies 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 Watts Water. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Watts Water Technologies has no effect on the direction of Omega Flex i.e., Omega Flex and Watts Water go up and down completely randomly.
Pair Corralation between Omega Flex and Watts Water
Given the investment horizon of 90 days Omega Flex is expected to under-perform the Watts Water. But the stock apears to be less risky and, when comparing its historical volatility, Omega Flex is 1.19 times less risky than Watts Water. The stock trades about -0.19 of its potential returns per unit of risk. The Watts Water Technologies is currently generating about 0.08 of returns per unit of risk over similar time horizon. If you would invest 20,745 in Watts Water Technologies on November 18, 2024 and sell it today you would earn a total of 642.00 from holding Watts Water Technologies or generate 3.09% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Omega Flex vs. Watts Water Technologies
Performance |
| Timeline |
| Omega Flex |
| Watts Water Technologies |
Omega Flex and Watts Water Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Omega Flex and Watts Water
The main advantage of trading using opposite Omega Flex and Watts Water positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Omega Flex position performs unexpectedly, Watts Water 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 Watts Water will offset losses from the drop in Watts Water's long position.| Omega Flex vs. Helios Technologies | Omega Flex vs. Enpro Industries | Omega Flex vs. Luxfer Holdings PLC | Omega Flex vs. Hurco Companies |
| Watts Water vs. IDEX Corporation | Watts Water vs. Donaldson | Watts Water vs. Gorman Rupp | Watts Water vs. Enerpac Tool Group |
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 Price Ceiling Movement module to calculate and plot Price Ceiling Movement for different equity instruments.
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