Correlation Between Taylor Devices and ITT
Can any of the company-specific risk be diversified away by investing in both Taylor Devices and ITT 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 ITT into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Taylor Devices and ITT Inc, you can compare the effects of market volatilities on Taylor Devices and ITT 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 ITT. Check out your portfolio center. Please also check ongoing floating volatility patterns of Taylor Devices and ITT.
Diversification Opportunities for Taylor Devices and ITT
-0.52 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Taylor and ITT is -0.52. Overlapping area represents the amount of risk that can be diversified away by holding Taylor Devices and ITT Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ITT 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 ITT. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of ITT Inc has no effect on the direction of Taylor Devices i.e., Taylor Devices and ITT go up and down completely randomly.
Pair Corralation between Taylor Devices and ITT
Given the investment horizon of 90 days Taylor Devices is expected to generate 14.46 times less return on investment than ITT. In addition to that, Taylor Devices is 3.35 times more volatile than ITT Inc. It trades about 0.01 of its total potential returns per unit of risk. ITT Inc is currently generating about 0.27 per unit of volatility. If you would invest 14,454 in ITT Inc on August 27, 2024 and sell it today you would earn a total of 1,384 from holding ITT Inc or generate 9.58% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Taylor Devices vs. ITT Inc
Performance |
| Timeline |
| Taylor Devices |
| ITT Inc |
Taylor Devices and ITT Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Taylor Devices and ITT
The main advantage of trading using opposite Taylor Devices and ITT positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Taylor Devices position performs unexpectedly, ITT 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 ITT will offset losses from the drop in ITT's long position.| Taylor Devices vs. Tennant Company | Taylor Devices vs. Kadant Inc | Taylor Devices vs. Enpro Industries | Taylor Devices vs. Luxfer Holdings PLC |
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 Performance Analysis module to check effects of mean-variance optimization against your current asset allocation.
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