Correlation Between Triumph and Innovative Solutions
Can any of the company-specific risk be diversified away by investing in both Triumph and Innovative Solutions 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 Triumph and Innovative Solutions into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Triumph Group and Innovative Solutions and, you can compare the effects of market volatilities on Triumph and Innovative Solutions 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 Triumph with a short position of Innovative Solutions. Check out your portfolio center. Please also check ongoing floating volatility patterns of Triumph and Innovative Solutions.
Diversification Opportunities for Triumph and Innovative Solutions
0.82 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Triumph and Innovative is 0.82. Overlapping area represents the amount of risk that can be diversified away by holding Triumph Group and Innovative Solutions and in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Innovative Solutions and and Triumph 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 Triumph Group are associated (or correlated) with Innovative Solutions. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Innovative Solutions and has no effect on the direction of Triumph i.e., Triumph and Innovative Solutions go up and down completely randomly.
Pair Corralation between Triumph and Innovative Solutions
Considering the 90-day investment horizon Triumph Group is expected to generate 2.83 times more return on investment than Innovative Solutions. However, Triumph is 2.83 times more volatile than Innovative Solutions and. It trades about 0.3 of its potential returns per unit of risk. Innovative Solutions and is currently generating about 0.21 per unit of risk. If you would invest 1,490 in Triumph Group on August 27, 2024 and sell it today you would earn a total of 437.00 from holding Triumph Group or generate 29.33% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Triumph Group vs. Innovative Solutions and
Performance |
| Timeline |
| Triumph Group |
| Innovative Solutions and |
Triumph and Innovative Solutions Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Triumph and Innovative Solutions
The main advantage of trading using opposite Triumph and Innovative Solutions positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Triumph position performs unexpectedly, Innovative Solutions 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 Innovative Solutions will offset losses from the drop in Innovative Solutions' long position.| Triumph vs. Mercury Systems | Triumph vs. Curtiss Wright | Triumph vs. Hexcel | Triumph vs. Ducommun Incorporated |
| Innovative Solutions vs. Park Electrochemical | Innovative Solutions vs. VSE Corporation | Innovative Solutions vs. Curtiss Wright | Innovative Solutions vs. Ducommun Incorporated |
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 Equity Analysis module to research over 250,000 global equities including funds, stocks and ETFs to find investment opportunities.
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