Correlation Between IES Holdings and Badger Infrastructure

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

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

Diversification Opportunities for IES Holdings and Badger Infrastructure

-0.47

Correlation Coefficient

IES Holdings  Badger Infrastructure

Very good diversification

The 3 months correlation between IES and Badger is -0.47. Overlapping area represents the amount of risk that can be diversified away by holding IES Holdings and Badger Infrastructure Solution in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Badger Infrastructure and IES Holdings 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 IES Holdings are associated (or correlated) with Badger Infrastructure. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Badger Infrastructure has no effect on the direction of IES Holdings i.e., IES Holdings and Badger Infrastructure go up and down completely randomly.

Pair Corralation between IES Holdings and Badger Infrastructure

Given the investment horizon of 90 days IES Holdings is expected to under-perform the Badger Infrastructure. In addition to that, IES Holdings is 2.74 times more volatile than Badger Infrastructure Solutions. It trades about -0.02 of its total potential returns per unit of risk. Badger Infrastructure Solutions is currently generating about 0.12 per unit of volatility. If you would invest  2,469  in Badger Infrastructure Solutions on December 25, 2024 and sell it today you would earn a total of  301.00  from holding Badger Infrastructure Solutions or generate 12.19% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	88.14%
Values	Daily Returns

IES Holdings  vs.  Badger Infrastructure Solution

IES Holdings

Risk-Adjusted Performance

Very Weak

Over the last 90 days IES Holdings has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of rather sound basic indicators, IES Holdings is not utilizing all of its potentials. The latest stock price tumult, may contribute to shorter-term losses for the shareholders.

Badger Infrastructure

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Badger Infrastructure Solutions are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. Despite nearly abnormal technical and fundamental indicators, Badger Infrastructure reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with IES Holdings and Badger Infrastructure

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

The idea behind IES Holdings and Badger Infrastructure Solutions 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 Theme Ratings module to determine theme ratings based on digital equity recommendations. Macroaxis theme ratings are based on combination of fundamental analysis and risk-adjusted market performance.