Correlation Between Winland Holdings and FARO Technologies
Can any of the company-specific risk be diversified away by investing in both Winland Holdings and FARO 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 Winland Holdings and FARO Technologies into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Winland Holdings and FARO Technologies, you can compare the effects of market volatilities on Winland Holdings and FARO 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 Winland Holdings with a short position of FARO Technologies. Check out your portfolio center. Please also check ongoing floating volatility patterns of Winland Holdings and FARO Technologies.
Diversification Opportunities for Winland Holdings and FARO Technologies
0.68 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Winland and FARO is 0.68. Overlapping area represents the amount of risk that can be diversified away by holding Winland Holdings and FARO Technologies in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on FARO Technologies and Winland Holdings 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 Winland Holdings are associated (or correlated) with FARO Technologies. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of FARO Technologies has no effect on the direction of Winland Holdings i.e., Winland Holdings and FARO Technologies go up and down completely randomly.
Pair Corralation between Winland Holdings and FARO Technologies
If you would invest 1,827 in FARO Technologies on August 30, 2024 and sell it today you would earn a total of 800.00 from holding FARO Technologies or generate 43.79% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 4.35% |
| Values | Daily Returns |
Winland Holdings vs. FARO Technologies
Performance |
| Timeline |
| Winland Holdings |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Very Weak
| FARO Technologies |
Winland Holdings and FARO Technologies Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Winland Holdings and FARO Technologies
The main advantage of trading using opposite Winland Holdings and FARO Technologies positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Winland Holdings position performs unexpectedly, FARO 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 FARO Technologies will offset losses from the drop in FARO Technologies' long position.The idea behind Winland Holdings and FARO 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.| FARO Technologies vs. Coherent | FARO Technologies vs. ESCO Technologies | FARO Technologies vs. Mesa Laboratories | FARO Technologies vs. Sensata Technologies Holding |
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 Bonds Directory module to find actively traded corporate debentures issued by US companies.
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