Correlation Between ATVRockN and IDEX

Can any of the company-specific risk be diversified away by investing in both ATVRockN and IDEX 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 ATVRockN and IDEX into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between ATVRockN and IDEX Corporation, you can compare the effects of market volatilities on ATVRockN and IDEX 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 ATVRockN with a short position of IDEX. Check out your portfolio center. Please also check ongoing floating volatility patterns of ATVRockN and IDEX.

Diversification Opportunities for ATVRockN and IDEX

-0.5

Correlation Coefficient

ATVRockN  IDEX

Very good diversification

The 3 months correlation between ATVRockN and IDEX is -0.5. Overlapping area represents the amount of risk that can be diversified away by holding ATVRockN and IDEX Corp. in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on IDEX and ATVRockN 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 ATVRockN are associated (or correlated) with IDEX. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of IDEX has no effect on the direction of ATVRockN i.e., ATVRockN and IDEX go up and down completely randomly.

Pair Corralation between ATVRockN and IDEX

Given the investment horizon of 90 days ATVRockN is expected to generate 7.96 times more return on investment than IDEX. However, ATVRockN is 7.96 times more volatile than IDEX Corporation. It trades about 0.02 of its potential returns per unit of risk. IDEX Corporation is currently generating about 0.04 per unit of risk. If you would invest  0.19  in ATVRockN on September 11, 2024 and sell it today you would lose (0.10) from holding ATVRockN or give up 52.63% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	100.0%
Values	Daily Returns

ATVRockN  vs.  IDEX Corp.

ATVRockN

Risk-Adjusted Performance

2 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in ATVRockN are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. Despite quite weak basic indicators, ATVRockN disclosed solid returns over the last few months and may actually be approaching a breakup point.

IDEX

Risk-Adjusted Performance

13 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in IDEX Corporation are ranked lower than 13 (%) of all global equities and portfolios over the last 90 days. In spite of fairly unfluctuating technical and fundamental indicators, IDEX showed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with ATVRockN and IDEX

The main advantage of trading using opposite ATVRockN and IDEX positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if ATVRockN position performs unexpectedly, IDEX 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 IDEX will offset losses from the drop in IDEX's long position.

The idea behind ATVRockN and IDEX Corporation 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.

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 Sign In To Macroaxis module to sign in to explore Macroaxis' wealth optimization platform and fintech modules.