Correlation Between Timken and Mind Technology
Can any of the company-specific risk be diversified away by investing in both Timken and Mind Technology 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 Timken and Mind Technology into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Timken Company and Mind Technology, you can compare the effects of market volatilities on Timken and Mind Technology 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 Timken with a short position of Mind Technology. Check out your portfolio center. Please also check ongoing floating volatility patterns of Timken and Mind Technology.
Diversification Opportunities for Timken and Mind Technology
-0.06 | Correlation Coefficient |
Good diversification
The 3 months correlation between Timken and Mind is -0.06. Overlapping area represents the amount of risk that can be diversified away by holding Timken Company and Mind Technology in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Mind Technology and Timken 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 Timken Company are associated (or correlated) with Mind Technology. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Mind Technology has no effect on the direction of Timken i.e., Timken and Mind Technology go up and down completely randomly.
Pair Corralation between Timken and Mind Technology
Considering the 90-day investment horizon Timken Company is expected to generate 0.28 times more return on investment than Mind Technology. However, Timken Company is 3.57 times less risky than Mind Technology. It trades about 0.0 of its potential returns per unit of risk. Mind Technology is currently generating about -0.03 per unit of risk. If you would invest 8,261 in Timken Company on September 4, 2024 and sell it today you would lose (468.00) from holding Timken Company or give up 5.67% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Timken Company vs. Mind Technology
Performance |
| Timeline |
| Timken Company |
| Mind Technology |
Timken and Mind Technology Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Timken and Mind Technology
The main advantage of trading using opposite Timken and Mind Technology positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Timken position performs unexpectedly, Mind Technology 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 Mind Technology will offset losses from the drop in Mind Technology's long position.The idea behind Timken Company and Mind Technology 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.| Mind Technology vs. Spectris plc | Mind Technology vs. Electro Sensors | Mind Technology vs. Sono Tek Corp | Mind Technology vs. Vishay Precision Group |
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 Cryptocurrency Center module to build and monitor diversified portfolio of extremely risky digital assets and cryptocurrency.
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