Correlation Between IES Holdings and ONCOR

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

By analyzing existing cross correlation between IES Holdings and ONCOR ELEC DELIVERY, you can compare the effects of market volatilities on IES Holdings and ONCOR 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 ONCOR. Check out your portfolio center. Please also check ongoing floating volatility patterns of IES Holdings and ONCOR.

Diversification Opportunities for IES Holdings and ONCOR

-0.36

Correlation Coefficient

IES Holdings  ONCOR

Very good diversification

The 3 months correlation between IES and ONCOR is -0.36. Overlapping area represents the amount of risk that can be diversified away by holding IES Holdings and ONCOR ELEC DELIVERY in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ONCOR ELEC DELIVERY 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 ONCOR. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of ONCOR ELEC DELIVERY has no effect on the direction of IES Holdings i.e., IES Holdings and ONCOR go up and down completely randomly.

Pair Corralation between IES Holdings and ONCOR

Given the investment horizon of 90 days IES Holdings is expected to under-perform the ONCOR. In addition to that, IES Holdings is 5.72 times more volatile than ONCOR ELEC DELIVERY. It trades about -0.03 of its total potential returns per unit of risk. ONCOR ELEC DELIVERY is currently generating about 0.1 per unit of volatility. If you would invest  7,721  in ONCOR ELEC DELIVERY on December 30, 2024 and sell it today you would earn a total of  428.00  from holding ONCOR ELEC DELIVERY or generate 5.54% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	90.32%
Values	Daily Returns

IES Holdings  vs.  ONCOR ELEC DELIVERY

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 latest unsteady performance, the Stock's basic indicators remain sound and the latest tumult on Wall Street may also be a sign of longer-term gains for the firm shareholders.

ONCOR ELEC DELIVERY

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in ONCOR ELEC DELIVERY are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. Despite somewhat conflicting basic indicators, ONCOR may actually be approaching a critical reversion point that can send shares even higher in April 2025.

Pair Trading with IES Holdings and ONCOR

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

The idea behind IES Holdings and ONCOR ELEC DELIVERY 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 Dashboard module to portfolio dashboard that provides centralized access to all your investments.