Correlation Between Taylor Devices and Ametek
Can any of the company-specific risk be diversified away by investing in both Taylor Devices and Ametek 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 Taylor Devices and Ametek into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Taylor Devices and Ametek Inc, you can compare the effects of market volatilities on Taylor Devices and Ametek 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 Taylor Devices with a short position of Ametek. Check out your portfolio center. Please also check ongoing floating volatility patterns of Taylor Devices and Ametek.
Diversification Opportunities for Taylor Devices and Ametek
-0.31 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Taylor and Ametek is -0.31. Overlapping area represents the amount of risk that can be diversified away by holding Taylor Devices and Ametek Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Ametek Inc and Taylor Devices 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 Taylor Devices are associated (or correlated) with Ametek. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Ametek Inc has no effect on the direction of Taylor Devices i.e., Taylor Devices and Ametek go up and down completely randomly.
Pair Corralation between Taylor Devices and Ametek
Given the investment horizon of 90 days Taylor Devices is expected to under-perform the Ametek. In addition to that, Taylor Devices is 2.82 times more volatile than Ametek Inc. It trades about -0.17 of its total potential returns per unit of risk. Ametek Inc is currently generating about -0.34 per unit of volatility. If you would invest 19,684 in Ametek Inc on September 25, 2024 and sell it today you would lose (1,279) from holding Ametek Inc or give up 6.5% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Taylor Devices vs. Ametek Inc
Performance |
| Timeline |
| Taylor Devices |
| Ametek Inc |
Taylor Devices and Ametek Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Taylor Devices and Ametek
The main advantage of trading using opposite Taylor Devices and Ametek positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Taylor Devices position performs unexpectedly, Ametek 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 Ametek will offset losses from the drop in Ametek's long position.The idea behind Taylor Devices and Ametek Inc pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.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 Commodity Channel module to use Commodity Channel Index to analyze current equity momentum.
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