Correlation Between Wex and Cognex
Can any of the company-specific risk be diversified away by investing in both Wex and Cognex 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 Wex and Cognex into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Wex Inc and Cognex, you can compare the effects of market volatilities on Wex and Cognex 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 Wex with a short position of Cognex. Check out your portfolio center. Please also check ongoing floating volatility patterns of Wex and Cognex.
Diversification Opportunities for Wex and Cognex
Good diversification
The 3 months correlation between Wex and Cognex is -0.19. Overlapping area represents the amount of risk that can be diversified away by holding Wex Inc and Cognex in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Cognex and Wex 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 Wex Inc are associated (or correlated) with Cognex. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Cognex has no effect on the direction of Wex i.e., Wex and Cognex go up and down completely randomly.
Pair Corralation between Wex and Cognex
Considering the 90-day investment horizon Wex Inc is expected to under-perform the Cognex. But the stock apears to be less risky and, when comparing its historical volatility, Wex Inc is 1.25 times less risky than Cognex. The stock trades about -0.04 of its potential returns per unit of risk. The Cognex is currently generating about 0.03 of returns per unit of risk over similar time horizon. If you would invest 3,836 in Cognex on August 25, 2024 and sell it today you would earn a total of 231.00 from holding Cognex or generate 6.02% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Wex Inc vs. Cognex
Performance |
| Timeline |
| Wex Inc |
| Cognex |
Wex and Cognex Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Wex and Cognex
The main advantage of trading using opposite Wex and Cognex positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Wex position performs unexpectedly, Cognex 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 Cognex will offset losses from the drop in Cognex's long position.| Wex vs. Oneconnect Financial Technology | Wex vs. Global Business Travel | Wex vs. Alight Inc | Wex vs. CS Disco LLC |
| Cognex vs. Vontier Corp | Cognex vs. Teledyne Technologies Incorporated | Cognex vs. ESCO Technologies | Cognex 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 Fundamental Analysis module to view fundamental data based on most recent published financial statements.
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