Correlation Between Ducommun Incorporated and Byrna Technologies

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

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

Diversification Opportunities for Ducommun Incorporated and Byrna Technologies

0.66

Correlation Coefficient

Ducommun Incorporated  Byrna Technologies

Poor diversification

The 3 months correlation between Ducommun and Byrna is 0.66. Overlapping area represents the amount of risk that can be diversified away by holding Ducommun Incorporated and Byrna Technologies in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Byrna Technologies and Ducommun Incorporated 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 Ducommun Incorporated are associated (or correlated) with Byrna Technologies. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Byrna Technologies has no effect on the direction of Ducommun Incorporated i.e., Ducommun Incorporated and Byrna Technologies go up and down completely randomly.

Pair Corralation between Ducommun Incorporated and Byrna Technologies

Considering the 90-day investment horizon Ducommun Incorporated is expected to generate 0.32 times more return on investment than Byrna Technologies. However, Ducommun Incorporated is 3.17 times less risky than Byrna Technologies. It trades about -0.01 of its potential returns per unit of risk. Byrna Technologies is currently generating about -0.16 per unit of risk. If you would invest  6,095  in Ducommun Incorporated on December 29, 2024 and sell it today you would lose (109.00) from holding Ducommun Incorporated or give up 1.79% of portfolio value over 90 days.

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

Ducommun Incorporated  vs.  Byrna Technologies

Ducommun Incorporated

Risk-Adjusted Performance

Very Weak

Over the last 90 days Ducommun Incorporated has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of very healthy fundamental indicators, Ducommun Incorporated is not utilizing all of its potentials. The latest stock price disarray, may contribute to short-term losses for the investors.

Byrna Technologies

Risk-Adjusted Performance

Very Weak

Over the last 90 days Byrna Technologies has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of weak performance in the last few months, the Stock's basic indicators remain very healthy which may send shares a bit higher in April 2025. The recent disarray may also be a sign of long period up-swing for the firm investors.

Pair Trading with Ducommun Incorporated and Byrna Technologies

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

The idea behind Ducommun Incorporated and Byrna Technologies 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 Companies Directory module to evaluate performance of over 100,000 Stocks, Funds, and ETFs against different fundamentals.