Correlation Between Graco and IDEX

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

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

Diversification Opportunities for Graco and IDEX

0.54

Correlation Coefficient

Graco  IDEX

Very weak diversification

The 3 months correlation between Graco and IDEX is 0.54. Overlapping area represents the amount of risk that can be diversified away by holding Graco Inc and IDEX Corp. in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on IDEX and Graco 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 Graco Inc are associated (or correlated) with IDEX. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of IDEX has no effect on the direction of Graco i.e., Graco and IDEX go up and down completely randomly.

Pair Corralation between Graco and IDEX

Considering the 90-day investment horizon Graco Inc is expected to generate 0.63 times more return on investment than IDEX. However, Graco Inc is 1.58 times less risky than IDEX. It trades about -0.06 of its potential returns per unit of risk. IDEX Corporation is currently generating about -0.15 per unit of risk. If you would invest  9,079  in Graco Inc on November 28, 2024 and sell it today you would lose (396.00) from holding Graco Inc or give up 4.36% of portfolio value over 90 days.

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

Graco Inc  vs.  IDEX Corp.

Graco Inc

Risk-Adjusted Performance

Very Weak

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

IDEX

Risk-Adjusted Performance

Very Weak

Over the last 90 days IDEX Corporation has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of uncertain performance in the last few months, the Stock's technical and fundamental indicators remain fairly strong which may send shares a bit higher in March 2025. The current disturbance may also be a sign of long term up-swing for the company investors.

Pair Trading with Graco and IDEX

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

The idea behind Graco Inc and IDEX Corporation 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.

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 Cryptocurrency Center module to build and monitor diversified portfolio of extremely risky digital assets and cryptocurrency.