Correlation Between Microvision and FARO Technologies
Can any of the company-specific risk be diversified away by investing in both Microvision and FARO Technologies 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 Microvision and FARO Technologies into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Microvision and FARO Technologies, you can compare the effects of market volatilities on Microvision and FARO Technologies 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 Microvision with a short position of FARO Technologies. Check out your portfolio center. Please also check ongoing floating volatility patterns of Microvision and FARO Technologies.
Diversification Opportunities for Microvision and FARO Technologies
-0.79 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between Microvision and FARO is -0.79. Overlapping area represents the amount of risk that can be diversified away by holding Microvision and FARO Technologies in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on FARO Technologies and Microvision 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 Microvision are associated (or correlated) with FARO Technologies. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of FARO Technologies has no effect on the direction of Microvision i.e., Microvision and FARO Technologies go up and down completely randomly.
Pair Corralation between Microvision and FARO Technologies
Given the investment horizon of 90 days Microvision is expected to under-perform the FARO Technologies. In addition to that, Microvision is 1.41 times more volatile than FARO Technologies. It trades about -0.05 of its total potential returns per unit of risk. FARO Technologies is currently generating about 0.04 per unit of volatility. If you would invest 2,164 in FARO Technologies on September 25, 2024 and sell it today you would earn a total of 411.00 from holding FARO Technologies or generate 18.99% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Against |
Strength | Weak |
Accuracy | 100.0% |
Values | Daily Returns |
Microvision vs. FARO Technologies
Performance |
Timeline |
Microvision |
FARO Technologies |
Microvision and FARO Technologies Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Microvision and FARO Technologies
The main advantage of trading using opposite Microvision and FARO Technologies positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Microvision position performs unexpectedly, FARO Technologies 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 FARO Technologies will offset losses from the drop in FARO Technologies' long position.Microvision vs. Vontier Corp | Microvision vs. Teledyne Technologies Incorporated | Microvision vs. ESCO Technologies | Microvision vs. MKS Instruments |
FARO Technologies vs. Vontier Corp | FARO Technologies vs. Teledyne Technologies Incorporated | FARO Technologies vs. ESCO Technologies | FARO Technologies vs. MKS Instruments |
Check out your portfolio center.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 File Import module to quickly import all of your third-party portfolios from your local drive in csv format.
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