Correlation Between Powell Industries and Tantalus Systems
Can any of the company-specific risk be diversified away by investing in both Powell Industries and Tantalus Systems 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 Tantalus Systems into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Powell Industries and Tantalus Systems Holding, you can compare the effects of market volatilities on Powell Industries and Tantalus Systems 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 Tantalus Systems. Check out your portfolio center. Please also check ongoing floating volatility patterns of Powell Industries and Tantalus Systems.
Diversification Opportunities for Powell Industries and Tantalus Systems
0.61 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Powell and Tantalus is 0.61. Overlapping area represents the amount of risk that can be diversified away by holding Powell Industries and Tantalus Systems Holding in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Tantalus Systems Holding 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 Tantalus Systems. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Tantalus Systems Holding has no effect on the direction of Powell Industries i.e., Powell Industries and Tantalus Systems go up and down completely randomly.
Pair Corralation between Powell Industries and Tantalus Systems
Given the investment horizon of 90 days Powell Industries is expected to generate 1.17 times more return on investment than Tantalus Systems. However, Powell Industries is 1.17 times more volatile than Tantalus Systems Holding. It trades about 0.12 of its potential returns per unit of risk. Tantalus Systems Holding is currently generating about 0.09 per unit of risk. If you would invest 8,788 in Powell Industries on August 25, 2024 and sell it today you would earn a total of 20,200 from holding Powell Industries or generate 229.86% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Powell Industries vs. Tantalus Systems Holding
Performance |
| Timeline |
| Powell Industries |
| Tantalus Systems Holding |
Powell Industries and Tantalus Systems Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Powell Industries and Tantalus Systems
The main advantage of trading using opposite Powell Industries and Tantalus Systems positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Powell Industries position performs unexpectedly, Tantalus Systems 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 Tantalus Systems will offset losses from the drop in Tantalus Systems' long position.| Powell Industries vs. Kimball Electronics | Powell Industries vs. Hayward Holdings | Powell Industries vs. nVent Electric PLC | Powell Industries vs. Energizer Holdings |
| Tantalus Systems vs. FREYR Battery SA | Tantalus Systems vs. nVent Electric PLC | Tantalus Systems vs. Hubbell | Tantalus Systems vs. Advanced Energy Industries |
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 Technical Analysis module to check basic technical indicators and analysis based on most latest market data.
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