Correlation Between Rockwell Automation and Graham
Can any of the company-specific risk be diversified away by investing in both Rockwell Automation and Graham 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 Rockwell Automation and Graham into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Rockwell Automation and Graham, you can compare the effects of market volatilities on Rockwell Automation and Graham 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 Rockwell Automation with a short position of Graham. Check out your portfolio center. Please also check ongoing floating volatility patterns of Rockwell Automation and Graham.
Diversification Opportunities for Rockwell Automation and Graham
0.85 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Rockwell and Graham is 0.85. Overlapping area represents the amount of risk that can be diversified away by holding Rockwell Automation and Graham in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Graham and Rockwell Automation 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 Rockwell Automation are associated (or correlated) with Graham. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Graham has no effect on the direction of Rockwell Automation i.e., Rockwell Automation and Graham go up and down completely randomly.
Pair Corralation between Rockwell Automation and Graham
Considering the 90-day investment horizon Rockwell Automation is expected to generate 7.68 times less return on investment than Graham. But when comparing it to its historical volatility, Rockwell Automation is 1.42 times less risky than Graham. It trades about 0.03 of its potential returns per unit of risk. Graham is currently generating about 0.14 of returns per unit of risk over similar time horizon. If you would invest 1,797 in Graham on September 3, 2024 and sell it today you would earn a total of 2,685 from holding Graham or generate 149.42% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Rockwell Automation vs. Graham
Performance |
| Timeline |
| Rockwell Automation |
| Graham |
Rockwell Automation and Graham Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Rockwell Automation and Graham
The main advantage of trading using opposite Rockwell Automation and Graham positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Rockwell Automation position performs unexpectedly, Graham 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 Graham will offset losses from the drop in Graham's long position.| Rockwell Automation vs. Dover | Rockwell Automation vs. Illinois Tool Works | Rockwell Automation vs. Ingersoll Rand | Rockwell Automation vs. Eaton PLC |
| Graham vs. Luxfer Holdings PLC | Graham vs. Enerpac Tool Group | Graham vs. Kadant Inc | Graham vs. Omega Flex |
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 Risk-Return Analysis module to view associations between returns expected from investment and the risk you assume.
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