Correlation Between Impinj and CVD Equipment

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

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

Diversification Opportunities for Impinj and CVD Equipment

-0.5

Correlation Coefficient

Impinj  CVD Equipment

Very good diversification

The 3 months correlation between Impinj and CVD is -0.5. Overlapping area represents the amount of risk that can be diversified away by holding Impinj Inc and CVD Equipment in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on CVD Equipment and Impinj 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 Impinj Inc are associated (or correlated) with CVD Equipment. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of CVD Equipment has no effect on the direction of Impinj i.e., Impinj and CVD Equipment go up and down completely randomly.

Pair Corralation between Impinj and CVD Equipment

Allowing for the 90-day total investment horizon Impinj Inc is expected to under-perform the CVD Equipment. But the stock apears to be less risky and, when comparing its historical volatility, Impinj Inc is 2.05 times less risky than CVD Equipment. The stock trades about -0.41 of its potential returns per unit of risk. The CVD Equipment is currently generating about 0.21 of returns per unit of risk over similar time horizon. If you would invest  306.00  in CVD Equipment on September 25, 2024 and sell it today you would earn a total of  76.00  from holding CVD Equipment or generate 24.84% return on investment over 90 days.

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

Impinj Inc  vs.  CVD Equipment

Impinj Inc

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Impinj Inc has generated negative risk-adjusted returns adding no value to investors with long positions. Despite weak performance in the last few months, the Stock's forward indicators remain fairly strong which may send shares a bit higher in January 2025. The recent confusion may also be a sign of long-lasting up-swing for the firm traders.

CVD Equipment

Risk-Adjusted Performance

6 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in CVD Equipment are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. In spite of fairly weak basic indicators, CVD Equipment showed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Impinj and CVD Equipment

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

The idea behind Impinj Inc and CVD Equipment 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 Sync Your Broker module to sync your existing holdings, watchlists, positions or portfolios from thousands of online brokerage services, banks, investment account aggregators and robo-advisors..