Correlation Between Interface and Perma Pipe
Can any of the company-specific risk be diversified away by investing in both Interface and Perma Pipe 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 Interface and Perma Pipe into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Interface and Perma Pipe International Holdings, you can compare the effects of market volatilities on Interface and Perma Pipe 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 Interface with a short position of Perma Pipe. Check out your portfolio center. Please also check ongoing floating volatility patterns of Interface and Perma Pipe.
Diversification Opportunities for Interface and Perma Pipe
0.79 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Interface and Perma is 0.79. Overlapping area represents the amount of risk that can be diversified away by holding Interface and Perma Pipe International Holdi in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Perma Pipe Internati and Interface 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 Interface are associated (or correlated) with Perma Pipe. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Perma Pipe Internati has no effect on the direction of Interface i.e., Interface and Perma Pipe go up and down completely randomly.
Pair Corralation between Interface and Perma Pipe
Given the investment horizon of 90 days Interface is expected to generate 0.9 times more return on investment than Perma Pipe. However, Interface is 1.11 times less risky than Perma Pipe. It trades about 0.07 of its potential returns per unit of risk. Perma Pipe International Holdings is currently generating about 0.04 per unit of risk. If you would invest 1,093 in Interface on October 20, 2024 and sell it today you would earn a total of 1,308 from holding Interface or generate 119.67% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Interface vs. Perma Pipe International Holdi
Performance |
| Timeline |
| Interface |
| Perma Pipe Internati |
Interface and Perma Pipe Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Interface and Perma Pipe
The main advantage of trading using opposite Interface and Perma Pipe positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Interface position performs unexpectedly, Perma Pipe 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 Perma Pipe will offset losses from the drop in Perma Pipe's long position.| Interface vs. Quanex Building Products | Interface vs. Janus International Group | Interface vs. Apogee Enterprises | Interface vs. Gibraltar Industries |
| Perma Pipe vs. Gibraltar Industries | Perma Pipe vs. Quanex Building Products | Perma Pipe vs. Jeld Wen Holding | Perma Pipe vs. Interface |
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 Sectors module to list of equity sectors categorizing publicly traded companies based on their primary business activities.
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