Correlation Between Graco and Omega Flex

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

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

Diversification Opportunities for Graco and Omega Flex

0.53

Correlation Coefficient

Graco  Omega Flex

Very weak diversification

The 3 months correlation between Graco and Omega is 0.53. Overlapping area represents the amount of risk that can be diversified away by holding Graco Inc and Omega Flex in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Omega Flex 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 Omega Flex. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Omega Flex has no effect on the direction of Graco i.e., Graco and Omega Flex go up and down completely randomly.

Pair Corralation between Graco and Omega Flex

Considering the 90-day investment horizon Graco is expected to generate 1.03 times less return on investment than Omega Flex. But when comparing it to its historical volatility, Graco Inc is 1.64 times less risky than Omega Flex. It trades about 0.15 of its potential returns per unit of risk. Omega Flex is currently generating about 0.1 of returns per unit of risk over similar time horizon. If you would invest  4,434  in Omega Flex on September 3, 2024 and sell it today you would earn a total of  508.00  from holding Omega Flex or generate 11.46% return on investment over 90 days.

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

Graco Inc  vs.  Omega Flex

Graco Inc

Risk-Adjusted Performance

12 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Graco Inc are ranked lower than 12 (%) of all global equities and portfolios over the last 90 days. Despite nearly unsteady technical and fundamental indicators, Graco may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Omega Flex

Risk-Adjusted Performance

7 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Omega Flex are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. In spite of fairly unfluctuating essential indicators, Omega Flex may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Pair Trading with Graco and Omega Flex

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

The idea behind Graco Inc and Omega Flex 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 Share Portfolio module to track or share privately all of your investments from the convenience of any device.