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
-0.4 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Optex and Butler is -0.4. 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 Holdings, is expected to under-perform the Butler National. But the stock apears to be less risky and, when comparing its historical volatility, Optex Systems Holdings, is 1.07 times less risky than Butler National. The stock trades about -0.23 of its potential returns per unit of risk. The Butler National Corp is currently generating about 0.19 of returns per unit of risk over similar time horizon. If you would invest 146.00 in Butler National Corp on October 23, 2024 and sell it today you would earn a total of 37.00 from holding Butler National Corp or generate 25.34% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| 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 |
| Butler National vs. Ballistic Recovery Systems | Butler National vs. BAB Inc | Butler National vs. Optex Systems Holdings, | Butler National vs. Smith Midland Corp |
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 Premium Stories module to follow Macroaxis premium stories from verified contributors across different equity types, categories and coverage scope.
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