Correlation Between Powell Industries and Signify NV
Can any of the company-specific risk be diversified away by investing in both Powell Industries and Signify NV 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 Powell Industries and Signify NV into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Powell Industries and Signify NV, you can compare the effects of market volatilities on Powell Industries and Signify NV 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 Powell Industries with a short position of Signify NV. Check out your portfolio center. Please also check ongoing floating volatility patterns of Powell Industries and Signify NV.
Diversification Opportunities for Powell Industries and Signify NV
0.33 | Correlation Coefficient |
Weak diversification
The 3 months correlation between Powell and Signify is 0.33. Overlapping area represents the amount of risk that can be diversified away by holding Powell Industries and Signify NV in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Signify NV and Powell Industries 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 Powell Industries are associated (or correlated) with Signify NV. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Signify NV has no effect on the direction of Powell Industries i.e., Powell Industries and Signify NV go up and down completely randomly.
Pair Corralation between Powell Industries and Signify NV
Given the investment horizon of 90 days Powell Industries is expected to generate 2.81 times more return on investment than Signify NV. However, Powell Industries is 2.81 times more volatile than Signify NV. It trades about 0.06 of its potential returns per unit of risk. Signify NV is currently generating about -0.18 per unit of risk. If you would invest 25,922 in Powell Industries on August 29, 2024 and sell it today you would earn a total of 1,241 from holding Powell Industries or generate 4.79% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 95.65% |
| Values | Daily Returns |
Powell Industries vs. Signify NV
Performance |
| Timeline |
| Powell Industries |
| Signify NV |
Powell Industries and Signify NV Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Powell Industries and Signify NV
The main advantage of trading using opposite Powell Industries and Signify NV positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Powell Industries position performs unexpectedly, Signify NV 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 Signify NV will offset losses from the drop in Signify NV's long position.| Powell Industries vs. Kimball Electronics | Powell Industries vs. Hayward Holdings | Powell Industries vs. nVent Electric PLC | Powell Industries vs. Energizer Holdings |
| Signify NV vs. Novonix Ltd ADR | Signify NV vs. Ilika plc | Signify NV vs. FuelPositive Corp | Signify NV vs. Novonix |
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 Anywhere module to track or share privately all of your investments from the convenience of any device.
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