Correlation Between Standex International and Tennant
Can any of the company-specific risk be diversified away by investing in both Standex International and Tennant 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 Tennant into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Standex International and Tennant Company, you can compare the effects of market volatilities on Standex International and Tennant 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 Tennant. Check out your portfolio center. Please also check ongoing floating volatility patterns of Standex International and Tennant.
Diversification Opportunities for Standex International and Tennant
-0.44 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Standex and Tennant is -0.44. Overlapping area represents the amount of risk that can be diversified away by holding Standex International and Tennant Company in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Tennant Company 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 Tennant. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Tennant Company has no effect on the direction of Standex International i.e., Standex International and Tennant go up and down completely randomly.
Pair Corralation between Standex International and Tennant
Considering the 90-day investment horizon Standex International is expected to generate 1.05 times more return on investment than Tennant. However, Standex International is 1.05 times more volatile than Tennant Company. It trades about 0.25 of its potential returns per unit of risk. Tennant Company is currently generating about -0.02 per unit of risk. If you would invest 17,909 in Standex International on August 29, 2024 and sell it today you would earn a total of 3,024 from holding Standex International or generate 16.89% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Standex International vs. Tennant Company
Performance |
| Timeline |
| Standex International |
| Tennant Company |
Standex International and Tennant Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Standex International and Tennant
The main advantage of trading using opposite Standex International and Tennant positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Standex International position performs unexpectedly, Tennant 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 Tennant will offset losses from the drop in Tennant'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 |
| Tennant vs. China Automotive Systems | Tennant vs. China Natural Resources | Tennant vs. Sonida Senior Living | Tennant vs. UTStarcom Holdings Corp |
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 Portfolio Backtesting module to avoid under-diversification and over-optimization by backtesting your portfolios.
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