Correlation Between IDEX and Helios Technologies

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

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

Diversification Opportunities for IDEX and Helios Technologies

0.9

Correlation Coefficient

IDEX  Helios Technologies

Almost no diversification

The 3 months correlation between IDEX and Helios is 0.9. Overlapping area represents the amount of risk that can be diversified away by holding IDEX Corp. and Helios Technologies in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Helios Technologies 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 Helios Technologies. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Helios Technologies has no effect on the direction of IDEX i.e., IDEX and Helios Technologies go up and down completely randomly.

Pair Corralation between IDEX and Helios Technologies

Considering the 90-day investment horizon IDEX is expected to generate 1.75 times less return on investment than Helios Technologies. But when comparing it to its historical volatility, IDEX Corporation is 1.7 times less risky than Helios Technologies. It trades about 0.14 of its potential returns per unit of risk. Helios Technologies is currently generating about 0.15 of returns per unit of risk over similar time horizon. If you would invest  4,189  in Helios Technologies on September 3, 2024 and sell it today you would earn a total of  1,043  from holding Helios Technologies or generate 24.9% return on investment over 90 days.

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

IDEX Corp.  vs.  Helios Technologies

IDEX

Risk-Adjusted Performance

11 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in IDEX Corporation are ranked lower than 11 (%) of all global equities and portfolios over the last 90 days. In spite of fairly uncertain technical and fundamental indicators, IDEX showed solid returns over the last few months and may actually be approaching a breakup point.

Helios Technologies

Risk-Adjusted Performance

11 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Helios Technologies are ranked lower than 11 (%) of all global equities and portfolios over the last 90 days. In spite of very unfluctuating forward indicators, Helios Technologies displayed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with IDEX and Helios Technologies

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

The idea behind IDEX Corporation and Helios Technologies 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 Stocks Directory module to find actively traded stocks across global markets.