Correlation Between FARO Technologies and Energous

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

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

Diversification Opportunities for FARO Technologies and Energous

-0.75

Correlation Coefficient

FARO Technologies  Energous

Pay attention - limited upside

The 3 months correlation between FARO and Energous is -0.75. Overlapping area represents the amount of risk that can be diversified away by holding FARO Technologies and Energous in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Energous and FARO Technologies 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 FARO Technologies are associated (or correlated) with Energous. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Energous has no effect on the direction of FARO Technologies i.e., FARO Technologies and Energous go up and down completely randomly.

Pair Corralation between FARO Technologies and Energous

Given the investment horizon of 90 days FARO Technologies is expected to generate 1.27 times more return on investment than Energous. However, FARO Technologies is 1.27 times more volatile than Energous. It trades about 0.13 of its potential returns per unit of risk. Energous is currently generating about -0.24 per unit of risk. If you would invest  1,824  in FARO Technologies on September 24, 2024 and sell it today you would earn a total of  770.00  from holding FARO Technologies or generate 42.21% return on investment over 90 days.

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

FARO Technologies  vs.  Energous

FARO Technologies

Risk-Adjusted Performance

10 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in FARO Technologies are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. In spite of very uncertain basic indicators, FARO Technologies displayed solid returns over the last few months and may actually be approaching a breakup point.

Energous

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Energous has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of abnormal performance in the last few months, the Stock's basic indicators remain comparatively stable which may send shares a bit higher in January 2025. The newest uproar may also be a sign of mid-term up-swing for the firm private investors.

Pair Trading with FARO Technologies and Energous

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

The idea behind FARO Technologies and Energous 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 Portfolio Suggestion module to get suggestions outside of your existing asset allocation including your own model portfolios.