Correlation Between Sono Tek and Mesa Laboratories
Can any of the company-specific risk be diversified away by investing in both Sono Tek and Mesa Laboratories 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 Sono Tek and Mesa Laboratories into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Sono Tek Corp and Mesa Laboratories, you can compare the effects of market volatilities on Sono Tek and Mesa Laboratories 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 Sono Tek with a short position of Mesa Laboratories. Check out your portfolio center. Please also check ongoing floating volatility patterns of Sono Tek and Mesa Laboratories.
Diversification Opportunities for Sono Tek and Mesa Laboratories
-0.55 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Sono and Mesa is -0.55. Overlapping area represents the amount of risk that can be diversified away by holding Sono Tek Corp and Mesa Laboratories in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Mesa Laboratories and Sono Tek 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 Sono Tek Corp are associated (or correlated) with Mesa Laboratories. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Mesa Laboratories has no effect on the direction of Sono Tek i.e., Sono Tek and Mesa Laboratories go up and down completely randomly.
Pair Corralation between Sono Tek and Mesa Laboratories
Given the investment horizon of 90 days Sono Tek Corp is expected to under-perform the Mesa Laboratories. But the stock apears to be less risky and, when comparing its historical volatility, Sono Tek Corp is 1.24 times less risky than Mesa Laboratories. The stock trades about -0.19 of its potential returns per unit of risk. The Mesa Laboratories is currently generating about 0.06 of returns per unit of risk over similar time horizon. If you would invest 13,197 in Mesa Laboratories on November 3, 2024 and sell it today you would earn a total of 381.25 from holding Mesa Laboratories or generate 2.89% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Sono Tek Corp vs. Mesa Laboratories
Performance |
| Timeline |
| Sono Tek Corp |
| Mesa Laboratories |
Sono Tek and Mesa Laboratories Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Sono Tek and Mesa Laboratories
The main advantage of trading using opposite Sono Tek and Mesa Laboratories positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Sono Tek position performs unexpectedly, Mesa Laboratories 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 Mesa Laboratories will offset losses from the drop in Mesa Laboratories' long position.| Sono Tek vs. Novanta | Sono Tek vs. ESCO Technologies | Sono Tek vs. Vontier Corp | Sono Tek vs. Sensata Technologies Holding |
| Mesa Laboratories vs. Novanta | Mesa Laboratories vs. Itron Inc | Mesa Laboratories vs. Fortive Corp | Mesa Laboratories vs. Vishay Precision Group |
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 Cryptocurrency Center module to build and monitor diversified portfolio of extremely risky digital assets and cryptocurrency.
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