Correlation Between Itron and Electronic Sensor

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

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

Diversification Opportunities for Itron and Electronic Sensor

0.0

Correlation Coefficient

Itron  Electronic Sensor

Pay attention - limited upside

The 3 months correlation between Itron and Electronic is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding Itron Inc and Electronic Sensor Technology in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Electronic Sensor and Itron 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 Itron Inc are associated (or correlated) with Electronic Sensor. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Electronic Sensor has no effect on the direction of Itron i.e., Itron and Electronic Sensor go up and down completely randomly.

Pair Corralation between Itron and Electronic Sensor

If you would invest  10,254  in Itron Inc on September 13, 2024 and sell it today you would earn a total of  1,175  from holding Itron Inc or generate 11.46% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Flat
Strength	Insignificant
Accuracy	100.0%
Values	Daily Returns

Itron Inc  vs.  Electronic Sensor Technology

Itron Inc

Risk-Adjusted Performance

7 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Itron Inc are ranked lower than 7 (%) 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.

Electronic Sensor

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Electronic Sensor Technology has generated negative risk-adjusted returns adding no value to investors with long positions. Even with relatively invariable basic indicators, Electronic Sensor is not utilizing all of its potentials. The current stock price agitation, may contribute to short-term losses for the retail investors.

Pair Trading with Itron and Electronic Sensor

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

The idea behind Itron Inc and Electronic Sensor Technology 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 Bonds Directory module to find actively traded corporate debentures issued by US companies.