Correlation Between Impinj and Lowes Companies

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

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

Diversification Opportunities for Impinj and Lowes Companies

0.63

Correlation Coefficient

Impinj  Lowes Companies

Poor diversification

The 3 months correlation between Impinj and Lowes is 0.63. Overlapping area represents the amount of risk that can be diversified away by holding Impinj Inc and Lowes Companies in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Lowes Companies 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 Lowes Companies. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Lowes Companies has no effect on the direction of Impinj i.e., Impinj and Lowes Companies go up and down completely randomly.

Pair Corralation between Impinj and Lowes Companies

Assuming the 90 days trading horizon Impinj Inc is expected to under-perform the Lowes Companies. In addition to that, Impinj is 3.07 times more volatile than Lowes Companies. It trades about -0.14 of its total potential returns per unit of risk. Lowes Companies is currently generating about -0.08 per unit of volatility. If you would invest  23,478  in Lowes Companies on December 30, 2024 and sell it today you would lose (2,053) from holding Lowes Companies or give up 8.74% of portfolio value over 90 days.

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

Impinj Inc  vs.  Lowes Companies

Impinj Inc

Risk-Adjusted Performance

Very Weak

Over the last 90 days Impinj Inc has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fragile performance in the last few months, the Stock's basic indicators remain comparatively stable which may send shares a bit higher in April 2025. The newest uproar may also be a sign of mid-term up-swing for the firm private investors.

Lowes Companies

Risk-Adjusted Performance

Very Weak

Over the last 90 days Lowes Companies has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest uncertain performance, the Stock's basic indicators remain stable and the current disturbance on Wall Street may also be a sign of long-run gains for the company stockholders.

Pair Trading with Impinj and Lowes Companies

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

The idea behind Impinj Inc and Lowes Companies 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 Performance Analysis module to check effects of mean-variance optimization against your current asset allocation.