Correlation Between Xometry and Flowserve
Can any of the company-specific risk be diversified away by investing in both Xometry and Flowserve 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 Xometry and Flowserve into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Xometry and Flowserve, you can compare the effects of market volatilities on Xometry and Flowserve 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 Xometry with a short position of Flowserve. Check out your portfolio center. Please also check ongoing floating volatility patterns of Xometry and Flowserve.
Diversification Opportunities for Xometry and Flowserve
Very poor diversification
The 3 months correlation between Xometry and Flowserve is 0.82. Overlapping area represents the amount of risk that can be diversified away by holding Xometry and Flowserve in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Flowserve and Xometry 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 Xometry are associated (or correlated) with Flowserve. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Flowserve has no effect on the direction of Xometry i.e., Xometry and Flowserve go up and down completely randomly.
Pair Corralation between Xometry and Flowserve
Given the investment horizon of 90 days Xometry is expected to generate 3.12 times more return on investment than Flowserve. However, Xometry is 3.12 times more volatile than Flowserve. It trades about 0.31 of its potential returns per unit of risk. Flowserve is currently generating about 0.28 per unit of risk. If you would invest 2,046 in Xometry on August 30, 2024 and sell it today you would earn a total of 1,054 from holding Xometry or generate 51.52% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Xometry vs. Flowserve
Performance |
| Timeline |
| Xometry |
| Flowserve |
Xometry and Flowserve Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Xometry and Flowserve
The main advantage of trading using opposite Xometry and Flowserve positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Xometry position performs unexpectedly, Flowserve 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 Flowserve will offset losses from the drop in Flowserve's long position.The idea behind Xometry and Flowserve 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.| Flowserve vs. Illinois Tool Works | Flowserve vs. Pentair PLC | Flowserve vs. Emerson Electric | Flowserve vs. Smith AO |
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 Investing Opportunities module to build portfolios using our predefined set of ideas and optimize them against your investing preferences.
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