Correlation Between Optex Systems and Butler National
Can any of the company-specific risk be diversified away by investing in both Optex Systems and Butler National 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 Optex Systems and Butler National into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Optex Systems Holdings, and Butler National Corp, you can compare the effects of market volatilities on Optex Systems and Butler National 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 Optex Systems with a short position of Butler National. Check out your portfolio center. Please also check ongoing floating volatility patterns of Optex Systems and Butler National.
Diversification Opportunities for Optex Systems and Butler National
0.51 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Optex and Butler is 0.51. Overlapping area represents the amount of risk that can be diversified away by holding Optex Systems Holdings, and Butler National Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Butler National Corp and Optex Systems 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 Optex Systems Holdings, are associated (or correlated) with Butler National. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Butler National Corp has no effect on the direction of Optex Systems i.e., Optex Systems and Butler National go up and down completely randomly.
Pair Corralation between Optex Systems and Butler National
Given the investment horizon of 90 days Optex Systems is expected to generate 2.98 times less return on investment than Butler National. In addition to that, Optex Systems is 1.18 times more volatile than Butler National Corp. It trades about 0.11 of its total potential returns per unit of risk. Butler National Corp is currently generating about 0.39 per unit of volatility. If you would invest 130.00 in Butler National Corp on September 1, 2024 and sell it today you would earn a total of 38.00 from holding Butler National Corp or generate 29.23% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 95.45% |
| Values | Daily Returns |
Optex Systems Holdings, vs. Butler National Corp
Performance |
| Timeline |
| Optex Systems Holdings, |
| Butler National Corp |
Optex Systems and Butler National Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Optex Systems and Butler National
The main advantage of trading using opposite Optex Systems and Butler National positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Optex Systems position performs unexpectedly, Butler National 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 Butler National will offset losses from the drop in Butler National's long position.| Optex Systems vs. CPI Aerostructures | Optex Systems vs. VirTra Inc | Optex Systems vs. Innovative Solutions and | Optex Systems vs. Tat Techno |
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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 Portfolio Dashboard module to portfolio dashboard that provides centralized access to all your investments.
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