Correlation Between Standex International and Installed Building
Can any of the company-specific risk be diversified away by investing in both Standex International and Installed Building 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 Standex International and Installed Building into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Standex International and Installed Building Products, you can compare the effects of market volatilities on Standex International and Installed Building 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 Standex International with a short position of Installed Building. Check out your portfolio center. Please also check ongoing floating volatility patterns of Standex International and Installed Building.
Diversification Opportunities for Standex International and Installed Building
-0.23 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Standex and Installed is -0.23. Overlapping area represents the amount of risk that can be diversified away by holding Standex International and Installed Building Products in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Installed Building and Standex International 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 Standex International are associated (or correlated) with Installed Building. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Installed Building has no effect on the direction of Standex International i.e., Standex International and Installed Building go up and down completely randomly.
Pair Corralation between Standex International and Installed Building
Considering the 90-day investment horizon Standex International is expected to generate 0.62 times more return on investment than Installed Building. However, Standex International is 1.61 times less risky than Installed Building. It trades about 0.1 of its potential returns per unit of risk. Installed Building Products is currently generating about 0.04 per unit of risk. If you would invest 16,525 in Standex International on September 1, 2024 and sell it today you would earn a total of 4,264 from holding Standex International or generate 25.8% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Standex International vs. Installed Building Products
Performance |
| Timeline |
| Standex International |
| Installed Building |
Standex International and Installed Building Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Standex International and Installed Building
The main advantage of trading using opposite Standex International and Installed Building positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Standex International position performs unexpectedly, Installed Building 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 Installed Building will offset losses from the drop in Installed Building's long position.| Standex International vs. Gorman Rupp | Standex International vs. Franklin Electric Co | Standex International vs. Omega Flex | Standex International vs. China Yuchai International |
| Installed Building vs. Century Communities | Installed Building vs. MI Homes | Installed Building vs. Taylor Morn Home | Installed Building vs. TRI Pointe Homes |
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 Price Exposure Probability module to analyze equity upside and downside potential for a given time horizon across multiple markets.
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