Correlation Between Vontier Corp and Itron

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

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

Diversification Opportunities for Vontier Corp and Itron

0.92

Correlation Coefficient

Vontier Corp  Itron

Almost no diversification

The 3 months correlation between Vontier and Itron is 0.92. Overlapping area represents the amount of risk that can be diversified away by holding Vontier Corp and Itron Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Itron Inc and Vontier Corp 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 Vontier Corp are associated (or correlated) with Itron. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Itron Inc has no effect on the direction of Vontier Corp i.e., Vontier Corp and Itron go up and down completely randomly.

Pair Corralation between Vontier Corp and Itron

Considering the 90-day investment horizon Vontier Corp is expected to generate 1.32 times less return on investment than Itron. But when comparing it to its historical volatility, Vontier Corp is 1.08 times less risky than Itron. It trades about 0.14 of its potential returns per unit of risk. Itron Inc is currently generating about 0.17 of returns per unit of risk over similar time horizon. If you would invest  9,777  in Itron Inc on August 31, 2024 and sell it today you would earn a total of  2,152  from holding Itron Inc or generate 22.01% return on investment over 90 days.

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

Vontier Corp  vs.  Itron Inc

Vontier Corp

Risk-Adjusted Performance

11 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Vontier Corp are ranked lower than 11 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively weak basic indicators, Vontier Corp unveiled solid returns over the last few months and may actually be approaching a breakup point.

Itron Inc

Risk-Adjusted Performance

13 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Itron Inc are ranked lower than 13 (%) of all global equities and portfolios over the last 90 days. Despite fairly weak basic indicators, Itron demonstrated solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Vontier Corp and Itron

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

The idea behind Vontier Corp and Itron 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 Latest Portfolios module to quick portfolio dashboard that showcases your latest portfolios.