Correlation Between Foxx Development and Rockwell Automation

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

By analyzing existing cross correlation between Foxx Development Holdings and Rockwell Automation, you can compare the effects of market volatilities on Foxx Development and Rockwell Automation 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 Foxx Development with a short position of Rockwell Automation. Check out your portfolio center. Please also check ongoing floating volatility patterns of Foxx Development and Rockwell Automation.

Diversification Opportunities for Foxx Development and Rockwell Automation

-0.61

Correlation Coefficient

Foxx Development  Rockwell Automation

Excellent diversification

The 3 months correlation between Foxx and Rockwell is -0.61. Overlapping area represents the amount of risk that can be diversified away by holding Foxx Development Holdings and Rockwell Automation in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Rockwell Automation and Foxx Development 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 Foxx Development Holdings are associated (or correlated) with Rockwell Automation. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Rockwell Automation has no effect on the direction of Foxx Development i.e., Foxx Development and Rockwell Automation go up and down completely randomly.

Pair Corralation between Foxx Development and Rockwell Automation

Given the investment horizon of 90 days Foxx Development Holdings is expected to under-perform the Rockwell Automation. In addition to that, Foxx Development is 12.06 times more volatile than Rockwell Automation. It trades about -0.04 of its total potential returns per unit of risk. Rockwell Automation is currently generating about -0.06 per unit of volatility. If you would invest  29,870  in Rockwell Automation on October 26, 2024 and sell it today you would lose (866.00) from holding Rockwell Automation or give up 2.9% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Weak
Accuracy	97.5%
Values	Daily Returns

Foxx Development Holdings  vs.  Rockwell Automation

Foxx Development Holdings

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Foxx Development Holdings 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 fairly strong which may send shares a bit higher in February 2025. The current disturbance may also be a sign of long term up-swing for the company investors.

Rockwell Automation

Risk-Adjusted Performance

5 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Rockwell Automation are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. Despite quite abnormal basic indicators, Rockwell Automation may actually be approaching a critical reversion point that can send shares even higher in February 2025.

Pair Trading with Foxx Development and Rockwell Automation

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

The idea behind Foxx Development Holdings and Rockwell Automation 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 Portfolio Rebalancing module to analyze risk-adjusted returns against different time horizons to find asset-allocation targets.