Correlation Between Graham and Intevac

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

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

Diversification Opportunities for Graham and Intevac

-0.85

Correlation Coefficient

Graham  Intevac

Pay attention - limited upside

The 3 months correlation between Graham and Intevac is -0.85. Overlapping area represents the amount of risk that can be diversified away by holding Graham and Intevac in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Intevac and Graham 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 Graham are associated (or correlated) with Intevac. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Intevac has no effect on the direction of Graham i.e., Graham and Intevac go up and down completely randomly.

Pair Corralation between Graham and Intevac

Considering the 90-day investment horizon Graham is expected to generate 0.9 times more return on investment than Intevac. However, Graham is 1.12 times less risky than Intevac. It trades about 0.22 of its potential returns per unit of risk. Intevac is currently generating about -0.08 per unit of risk. If you would invest  2,965  in Graham on September 2, 2024 and sell it today you would earn a total of  1,517  from holding Graham or generate 51.16% return on investment over 90 days.

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

Graham  vs.  Intevac

Graham

Risk-Adjusted Performance

17 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Graham are ranked lower than 17 (%) of all global equities and portfolios over the last 90 days. In spite of very weak technical indicators, Graham displayed solid returns over the last few months and may actually be approaching a breakup point.

Intevac

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Intevac has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of unsteady performance in the last few months, the Stock's basic indicators remain rather sound which may send shares a bit higher in January 2025. The latest tumult may also be a sign of longer-term up-swing for the firm shareholders.

Pair Trading with Graham and Intevac

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

The idea behind Graham and Intevac 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 Analyst Advice module to analyst recommendations and target price estimates broken down by several categories.