Correlation Between Itron and Trimble

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

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

Diversification Opportunities for Itron and Trimble

0.72

Correlation Coefficient

Itron  Trimble

Poor diversification

The 3 months correlation between Itron and Trimble is 0.72. Overlapping area represents the amount of risk that can be diversified away by holding Itron Inc and Trimble in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Trimble and Itron 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 Itron Inc are associated (or correlated) with Trimble. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Trimble has no effect on the direction of Itron i.e., Itron and Trimble go up and down completely randomly.

Pair Corralation between Itron and Trimble

Given the investment horizon of 90 days Itron Inc is expected to generate 1.33 times more return on investment than Trimble. However, Itron is 1.33 times more volatile than Trimble. It trades about 0.08 of its potential returns per unit of risk. Trimble is currently generating about 0.07 per unit of risk. If you would invest  7,601  in Itron Inc on October 7, 2024 and sell it today you would earn a total of  3,428  from holding Itron Inc or generate 45.1% return on investment over 90 days.

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

Itron Inc  vs.  Trimble

Itron Inc

Risk-Adjusted Performance

3 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Itron Inc are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. Despite fairly strong basic indicators, Itron is not utilizing all of its potentials. The current stock price confusion, may contribute to short-horizon losses for the traders.

Trimble

Risk-Adjusted Performance

7 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Trimble are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. Despite somewhat abnormal primary indicators, Trimble sustained solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Itron and Trimble

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

The idea behind Itron Inc and Trimble 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 Equity Analysis module to research over 250,000 global equities including funds, stocks and ETFs to find investment opportunities.