Correlation Between Tennant and Watts Water
Can any of the company-specific risk be diversified away by investing in both Tennant and Watts Water 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 Tennant and Watts Water into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Tennant Company and Watts Water Technologies, you can compare the effects of market volatilities on Tennant and Watts Water 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 Tennant with a short position of Watts Water. Check out your portfolio center. Please also check ongoing floating volatility patterns of Tennant and Watts Water.
Diversification Opportunities for Tennant and Watts Water
0.64 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Tennant and Watts is 0.64. Overlapping area represents the amount of risk that can be diversified away by holding Tennant Company and Watts Water Technologies in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Watts Water Technologies and Tennant 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 Tennant Company are associated (or correlated) with Watts Water. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Watts Water Technologies has no effect on the direction of Tennant i.e., Tennant and Watts Water go up and down completely randomly.
Pair Corralation between Tennant and Watts Water
Considering the 90-day investment horizon Tennant Company is expected to generate 0.66 times more return on investment than Watts Water. However, Tennant Company is 1.52 times less risky than Watts Water. It trades about 0.19 of its potential returns per unit of risk. Watts Water Technologies is currently generating about 0.07 per unit of risk. If you would invest 8,058 in Tennant Company on November 18, 2024 and sell it today you would earn a total of 690.00 from holding Tennant Company or generate 8.56% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Tennant Company vs. Watts Water Technologies
Performance |
| Timeline |
| Tennant Company |
| Watts Water Technologies |
Tennant and Watts Water Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Tennant and Watts Water
The main advantage of trading using opposite Tennant and Watts Water positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Tennant position performs unexpectedly, Watts Water 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 Watts Water will offset losses from the drop in Watts Water's long position.| Tennant vs. Franklin Electric Co | Tennant vs. Omega Flex | Tennant vs. Luxfer Holdings PLC | Tennant vs. Kadant Inc |
| Watts Water vs. IDEX Corporation | Watts Water vs. Donaldson | Watts Water vs. Gorman Rupp | Watts Water vs. Enerpac Tool 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 Portfolio File Import module to quickly import all of your third-party portfolios from your local drive in csv format.
Other Complementary Tools
| Portfolio Analyzer Portfolio analysis module that provides access to portfolio diagnostics and optimization engine | |
| Latest Portfolios Quick portfolio dashboard that showcases your latest portfolios | |
| Portfolio Manager State of the art Portfolio Manager to monitor and improve performance of your invested capital | |
| Earnings Calls Check upcoming earnings announcements updated hourly across public exchanges | |
| Portfolio Dashboard Portfolio dashboard that provides centralized access to all your investments |