Correlation Between Tel Instrument and Woodward
Can any of the company-specific risk be diversified away by investing in both Tel Instrument and Woodward 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 Tel Instrument and Woodward into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Tel Instrument Electronics Corp and Woodward, you can compare the effects of market volatilities on Tel Instrument and Woodward 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 Tel Instrument with a short position of Woodward. Check out your portfolio center. Please also check ongoing floating volatility patterns of Tel Instrument and Woodward.
Diversification Opportunities for Tel Instrument and Woodward
0.11 | Correlation Coefficient |
Average diversification
The 3 months correlation between Tel and Woodward is 0.11. Overlapping area represents the amount of risk that can be diversified away by holding Tel Instrument Electronics Cor and Woodward in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Woodward and Tel Instrument 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 Tel Instrument Electronics Corp are associated (or correlated) with Woodward. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Woodward has no effect on the direction of Tel Instrument i.e., Tel Instrument and Woodward go up and down completely randomly.
Pair Corralation between Tel Instrument and Woodward
Given the investment horizon of 90 days Tel Instrument is expected to generate 2.49 times less return on investment than Woodward. In addition to that, Tel Instrument is 1.68 times more volatile than Woodward. It trades about 0.02 of its total potential returns per unit of risk. Woodward is currently generating about 0.08 per unit of volatility. If you would invest 9,499 in Woodward on August 26, 2024 and sell it today you would earn a total of 8,106 from holding Woodward or generate 85.34% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 31.79% |
| Values | Daily Returns |
Tel Instrument Electronics Cor vs. Woodward
Performance |
| Timeline |
| Tel Instrument Elect |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Very Weak
| Woodward |
Tel Instrument and Woodward Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Tel Instrument and Woodward
The main advantage of trading using opposite Tel Instrument and Woodward positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Tel Instrument position performs unexpectedly, Woodward 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 Woodward will offset losses from the drop in Woodward's long position.| Tel Instrument vs. 808 Renewable Energy | Tel Instrument vs. Austal Limited | Tel Instrument vs. Sky Harbour Group | Tel Instrument vs. VirTra Inc |
| Woodward vs. Hexcel | Woodward vs. Ducommun Incorporated | Woodward vs. Mercury Systems | Woodward vs. AAR 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 Idea Breakdown module to analyze constituents of all Macroaxis ideas. Macroaxis investment ideas are predefined, sector-focused investing themes.
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