Correlation Between IDEX and Spirax Sarco

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

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

Diversification Opportunities for IDEX and Spirax Sarco

-0.45

Correlation Coefficient

IDEX  Spirax Sarco

Very good diversification

The 3 months correlation between IDEX and Spirax is -0.45. Overlapping area represents the amount of risk that can be diversified away by holding IDEX Corp. and Spirax Sarco Engineering PLC in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Spirax Sarco Enginee and IDEX 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 IDEX Corporation are associated (or correlated) with Spirax Sarco. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Spirax Sarco Enginee has no effect on the direction of IDEX i.e., IDEX and Spirax Sarco go up and down completely randomly.

Pair Corralation between IDEX and Spirax Sarco

Considering the 90-day investment horizon IDEX Corporation is expected to generate 0.71 times more return on investment than Spirax Sarco. However, IDEX Corporation is 1.41 times less risky than Spirax Sarco. It trades about 0.16 of its potential returns per unit of risk. Spirax Sarco Engineering PLC is currently generating about 0.0 per unit of risk. If you would invest  19,745  in IDEX Corporation on September 12, 2024 and sell it today you would earn a total of  3,050  from holding IDEX Corporation or generate 15.45% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	98.44%
Values	Daily Returns

IDEX Corp.  vs.  Spirax Sarco Engineering PLC

IDEX

Risk-Adjusted Performance

12 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in IDEX Corporation are ranked lower than 12 (%) of all global equities and portfolios over the last 90 days. In spite of fairly uncertain technical and fundamental indicators, IDEX showed solid returns over the last few months and may actually be approaching a breakup point.

Spirax Sarco Enginee

Risk-Adjusted Performance

0 of 100

Very Weak

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

Pair Trading with IDEX and Spirax Sarco

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

The idea behind IDEX Corporation and Spirax Sarco Engineering PLC 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 Comparator module to compare the composition, asset allocations and performance of any two portfolios in your account.