Correlation Between Regal Beloit and Flowserve
Can any of the company-specific risk be diversified away by investing in both Regal Beloit and Flowserve 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 Regal Beloit and Flowserve into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Regal Beloit and Flowserve, you can compare the effects of market volatilities on Regal Beloit and Flowserve 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 Regal Beloit with a short position of Flowserve. Check out your portfolio center. Please also check ongoing floating volatility patterns of Regal Beloit and Flowserve.
Diversification Opportunities for Regal Beloit and Flowserve
0.78 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Regal and Flowserve is 0.78. Overlapping area represents the amount of risk that can be diversified away by holding Regal Beloit and Flowserve in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Flowserve and Regal Beloit 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 Regal Beloit are associated (or correlated) with Flowserve. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Flowserve has no effect on the direction of Regal Beloit i.e., Regal Beloit and Flowserve go up and down completely randomly.
Pair Corralation between Regal Beloit and Flowserve
Considering the 90-day investment horizon Regal Beloit is expected to generate 3.45 times less return on investment than Flowserve. In addition to that, Regal Beloit is 1.08 times more volatile than Flowserve. It trades about 0.09 of its total potential returns per unit of risk. Flowserve is currently generating about 0.33 per unit of volatility. If you would invest 5,294 in Flowserve on August 27, 2024 and sell it today you would earn a total of 806.00 from holding Flowserve or generate 15.22% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Regal Beloit vs. Flowserve
Performance |
| Timeline |
| Regal Beloit |
| Flowserve |
Regal Beloit and Flowserve Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Regal Beloit and Flowserve
The main advantage of trading using opposite Regal Beloit and Flowserve positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Regal Beloit position performs unexpectedly, Flowserve 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 Flowserve will offset losses from the drop in Flowserve's long position.| Regal Beloit vs. IDEX Corporation | Regal Beloit vs. Watts Water Technologies | Regal Beloit vs. Donaldson | Regal Beloit vs. Gorman Rupp |
| Flowserve vs. Aquagold International | Flowserve vs. Morningstar Unconstrained Allocation | Flowserve vs. High Yield Municipal Fund | Flowserve vs. Thrivent High Yield |
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 Idea Breakdown module to analyze constituents of all Macroaxis ideas. Macroaxis investment ideas are predefined, sector-focused investing themes.
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