Correlation Between Buhler Industries and Rev

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

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

Diversification Opportunities for Buhler Industries and Rev

0.0

Correlation Coefficient

Buhler Industries  Rev

Pay attention - limited upside

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

Pair Corralation between Buhler Industries and Rev

Assuming the 90 days horizon Buhler Industries is expected to generate 5.19 times less return on investment than Rev. But when comparing it to its historical volatility, Buhler Industries is 2.29 times less risky than Rev. It trades about 0.04 of its potential returns per unit of risk. Rev Group is currently generating about 0.1 of returns per unit of risk over similar time horizon. If you would invest  1,069  in Rev Group on September 13, 2024 and sell it today you would earn a total of  2,303  from holding Rev Group or generate 215.43% return on investment over 90 days.

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

Buhler Industries  vs.  Rev Group

Buhler Industries

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Buhler Industries has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable basic indicators, Buhler Industries is not utilizing all of its potentials. The newest stock price disturbance, may contribute to mid-run losses for the stockholders.

Rev Group

Risk-Adjusted Performance

9 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Rev Group are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. Despite nearly unsteady basic indicators, Rev reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Buhler Industries and Rev

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

The idea behind Buhler Industries and Rev Group 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 Idea Breakdown module to analyze constituents of all Macroaxis ideas. Macroaxis investment ideas are predefined, sector-focused investing themes.