Correlation Between Cognex and Itron

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

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

Diversification Opportunities for Cognex and Itron

0.51

Correlation Coefficient

Cognex  Itron

Very weak diversification

The 3 months correlation between Cognex and Itron is 0.51. Overlapping area represents the amount of risk that can be diversified away by holding Cognex and Itron Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Itron Inc and Cognex 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 Cognex are associated (or correlated) with Itron. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Itron Inc has no effect on the direction of Cognex i.e., Cognex and Itron go up and down completely randomly.

Pair Corralation between Cognex and Itron

Given the investment horizon of 90 days Cognex is expected to under-perform the Itron. But the stock apears to be less risky and, when comparing its historical volatility, Cognex is 1.02 times less risky than Itron. The stock trades about -0.01 of its potential returns per unit of risk. The Itron Inc is currently generating about 0.08 of returns per unit of risk over similar time horizon. If you would invest  10,341  in Itron Inc on September 14, 2024 and sell it today you would earn a total of  856.00  from holding Itron Inc or generate 8.28% return on investment over 90 days.

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

Cognex  vs.  Itron Inc

Cognex

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Cognex has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly strong basic indicators, Cognex is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Itron Inc

Risk-Adjusted Performance

5 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Itron Inc are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. Despite fairly weak basic indicators, Itron may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Pair Trading with Cognex and Itron

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

The idea behind Cognex and Itron Inc 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.

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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 FinTech Suite module to use AI to screen and filter profitable investment opportunities.