Correlation Between Cognex and Itron
Can any of the company-specific risk be diversified away by investing in both Cognex 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 Cognex and Itron into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Cognex and Itron Inc, you can compare the effects of market volatilities on Cognex 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 Cognex with a short position of Itron. Check out your portfolio center. Please also check ongoing floating volatility patterns of Cognex and Itron.
Diversification Opportunities for Cognex and Itron
Very weak diversification
The 3 months correlation between Cognex and Itron is 0.47. Overlapping area represents the amount of risk that can be diversified away by holding Cognex and Itron Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Itron Inc and Cognex 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 Cognex 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 Cognex i.e., Cognex and Itron go up and down completely randomly.
Pair Corralation between Cognex and Itron
Given the investment horizon of 90 days Cognex is expected to under-perform the Itron. But the stock apears to be less risky and, when comparing its historical volatility, Cognex is 1.06 times less risky than Itron. The stock trades about -0.01 of its potential returns per unit of risk. The Itron Inc is currently generating about 0.08 of returns per unit of risk over similar time horizon. If you would invest 7,520 in Itron Inc on September 17, 2024 and sell it today you would earn a total of 3,674 from holding Itron Inc or generate 48.86% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Together |
Strength | Weak |
Accuracy | 100.0% |
Values | Daily Returns |
Cognex vs. Itron Inc
Performance |
Timeline |
Cognex |
Itron Inc |
Cognex and Itron Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Cognex and Itron
The main advantage of trading using opposite Cognex and Itron positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Cognex 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.Cognex vs. Vontier Corp | Cognex vs. Teledyne Technologies Incorporated | Cognex vs. ESCO Technologies | Cognex 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 Crypto Correlations module to use cryptocurrency correlation module to diversify your cryptocurrency portfolio across multiple coins.
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