Correlation Between Trimble and Keysight Technologies
Can any of the company-specific risk be diversified away by investing in both Trimble and Keysight Technologies 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 Trimble and Keysight Technologies into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Trimble and Keysight Technologies, you can compare the effects of market volatilities on Trimble and Keysight Technologies 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 Trimble with a short position of Keysight Technologies. Check out your portfolio center. Please also check ongoing floating volatility patterns of Trimble and Keysight Technologies.
Diversification Opportunities for Trimble and Keysight Technologies
0.73 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Trimble and Keysight is 0.73. Overlapping area represents the amount of risk that can be diversified away by holding Trimble and Keysight Technologies in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Keysight Technologies and Trimble 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 Trimble are associated (or correlated) with Keysight Technologies. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Keysight Technologies has no effect on the direction of Trimble i.e., Trimble and Keysight Technologies go up and down completely randomly.
Pair Corralation between Trimble and Keysight Technologies
Given the investment horizon of 90 days Trimble is expected to generate 1.5 times more return on investment than Keysight Technologies. However, Trimble is 1.5 times more volatile than Keysight Technologies. It trades about 0.21 of its potential returns per unit of risk. Keysight Technologies is currently generating about 0.18 per unit of risk. If you would invest 6,135 in Trimble on August 28, 2024 and sell it today you would earn a total of 1,102 from holding Trimble or generate 17.96% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Trimble vs. Keysight Technologies
Performance |
| Timeline |
| Trimble |
| Keysight Technologies |
Trimble and Keysight Technologies Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Trimble and Keysight Technologies
The main advantage of trading using opposite Trimble and Keysight Technologies positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Trimble position performs unexpectedly, Keysight Technologies 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 Keysight Technologies will offset losses from the drop in Keysight Technologies' long position.The idea behind Trimble and Keysight Technologies 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.| Keysight Technologies vs. Vontier Corp | Keysight Technologies vs. Teledyne Technologies Incorporated | Keysight Technologies vs. ESCO Technologies | Keysight Technologies vs. MKS Instruments |
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 My Watchlist Analysis module to analyze my current watchlist and to refresh optimization strategy. Macroaxis watchlist is based on self-learning algorithm to remember stocks you like.
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