Correlation Between Yokogawa Electric and ITT
Can any of the company-specific risk be diversified away by investing in both Yokogawa Electric and ITT 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 Yokogawa Electric and ITT into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Yokogawa Electric Corp and ITT Inc, you can compare the effects of market volatilities on Yokogawa Electric and ITT 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 Yokogawa Electric with a short position of ITT. Check out your portfolio center. Please also check ongoing floating volatility patterns of Yokogawa Electric and ITT.
Diversification Opportunities for Yokogawa Electric and ITT
-0.7 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Yokogawa and ITT is -0.7. Overlapping area represents the amount of risk that can be diversified away by holding Yokogawa Electric Corp and ITT Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ITT Inc and Yokogawa Electric 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 Yokogawa Electric Corp are associated (or correlated) with ITT. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of ITT Inc has no effect on the direction of Yokogawa Electric i.e., Yokogawa Electric and ITT go up and down completely randomly.
Pair Corralation between Yokogawa Electric and ITT
Assuming the 90 days horizon Yokogawa Electric Corp is expected to under-perform the ITT. In addition to that, Yokogawa Electric is 1.43 times more volatile than ITT Inc. It trades about -0.01 of its total potential returns per unit of risk. ITT Inc is currently generating about 0.35 per unit of volatility. If you would invest 13,983 in ITT Inc on September 1, 2024 and sell it today you would earn a total of 1,629 from holding ITT Inc or generate 11.65% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Yokogawa Electric Corp vs. ITT Inc
Performance |
| Timeline |
| Yokogawa Electric Corp |
| ITT Inc |
Yokogawa Electric and ITT Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Yokogawa Electric and ITT
The main advantage of trading using opposite Yokogawa Electric and ITT positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Yokogawa Electric position performs unexpectedly, ITT 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 ITT will offset losses from the drop in ITT's long position.| Yokogawa Electric vs. GE Aerospace | Yokogawa Electric vs. Eaton PLC | Yokogawa Electric vs. Siemens AG Class | Yokogawa Electric vs. Parker Hannifin |
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 ETF Categories module to list of ETF categories grouped based on various criteria, such as the investment strategy or type of investments.
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