Correlation Between Iteris and PC Tel

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

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

Diversification Opportunities for Iteris and PC Tel

0.52

Correlation Coefficient

Iteris  PC Tel

Very weak diversification

The 3 months correlation between Iteris and PCTI is 0.52. Overlapping area represents the amount of risk that can be diversified away by holding Iteris Inc and PC Tel Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on PC Tel Inc and Iteris 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 Iteris Inc are associated (or correlated) with PC Tel. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of PC Tel Inc has no effect on the direction of Iteris i.e., Iteris and PC Tel go up and down completely randomly.

Pair Corralation between Iteris and PC Tel

Considering the 90-day investment horizon Iteris Inc is expected to generate 20.14 times more return on investment than PC Tel. However, Iteris is 20.14 times more volatile than PC Tel Inc. It trades about 0.05 of its potential returns per unit of risk. PC Tel Inc is currently generating about 0.07 per unit of risk. If you would invest  306.00  in Iteris Inc on September 21, 2024 and sell it today you would earn a total of  26,343  from holding Iteris Inc or generate 8608.82% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Weak
Accuracy	29.98%
Values	Daily Returns

Iteris Inc  vs.  PC Tel Inc

Iteris Inc

Risk-Adjusted Performance

0 of 100

Good

Over the last 90 days Iteris Inc has generated negative risk-adjusted returns adding no value to investors with long positions. Despite fairly unsteady basic indicators, Iteris demonstrated solid returns over the last few months and may actually be approaching a breakup point.

PC Tel Inc

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days PC Tel Inc has generated negative risk-adjusted returns adding no value to investors with long positions. Despite fairly strong basic indicators, PC Tel is not utilizing all of its potentials. The current stock price confusion, may contribute to short-horizon losses for the traders.

Pair Trading with Iteris and PC Tel

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

The idea behind Iteris Inc and PC Tel 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 Technical Analysis module to check basic technical indicators and analysis based on most latest market data.