Correlation Between IDEX and Graco

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

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

Diversification Opportunities for IDEX and Graco

-0.15

Correlation Coefficient

IDEX  Graco

Good diversification

The 3 months correlation between IDEX and Graco is -0.15. Overlapping area represents the amount of risk that can be diversified away by holding IDEX Corp. and Graco Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Graco Inc and IDEX 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 IDEX Corporation are associated (or correlated) with Graco. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Graco Inc has no effect on the direction of IDEX i.e., IDEX and Graco go up and down completely randomly.

Pair Corralation between IDEX and Graco

Considering the 90-day investment horizon IDEX Corporation is expected to under-perform the Graco. In addition to that, IDEX is 1.43 times more volatile than Graco Inc. It trades about -0.12 of its total potential returns per unit of risk. Graco Inc is currently generating about 0.02 per unit of volatility. If you would invest  8,387  in Graco Inc on December 27, 2024 and sell it today you would earn a total of  73.00  from holding Graco Inc or generate 0.87% return on investment over 90 days.

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

IDEX Corp.  vs.  Graco Inc

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 April 2025. The current disturbance may also be a sign of long term up-swing for the company investors.

Graco Inc

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Graco Inc are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. 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.

Pair Trading with IDEX and Graco

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

The idea behind IDEX Corporation and Graco Inc 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 Pair Correlation module to compare performance and examine fundamental relationship between any two equity instruments.