Correlation Between ITT and Helios Technologies

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

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

Diversification Opportunities for ITT and Helios Technologies

0.65

Correlation Coefficient

ITT  Helios Technologies

Poor diversification

The 3 months correlation between ITT and Helios is 0.65. Overlapping area represents the amount of risk that can be diversified away by holding ITT Inc and Helios Technologies in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Helios Technologies and ITT 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 ITT Inc 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 ITT i.e., ITT and Helios Technologies go up and down completely randomly.

Pair Corralation between ITT and Helios Technologies

Considering the 90-day investment horizon ITT Inc is expected to generate 0.83 times more return on investment than Helios Technologies. However, ITT Inc is 1.2 times less risky than Helios Technologies. It trades about -0.05 of its potential returns per unit of risk. Helios Technologies is currently generating about -0.21 per unit of risk. If you would invest  14,309  in ITT Inc on December 27, 2024 and sell it today you would lose (903.00) from holding ITT Inc or give up 6.31% of portfolio value over 90 days.

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

ITT Inc  vs.  Helios Technologies

ITT Inc

Risk-Adjusted Performance

Very Weak

Over the last 90 days ITT Inc has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively stable basic indicators, ITT is not utilizing all of its potentials. The latest stock price uproar, may contribute to short-horizon losses for the private investors.

Helios Technologies

Risk-Adjusted Performance

Very Weak

Over the last 90 days Helios Technologies has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of unfluctuating performance in the last few months, the Stock's forward indicators remain very healthy which may send shares a bit higher in April 2025. The recent disarray may also be a sign of long period up-swing for the firm investors.

Pair Trading with ITT and Helios Technologies

The main advantage of trading using opposite ITT and Helios Technologies positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if ITT 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 ITT Inc 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 Portfolio Optimization module to compute new portfolio that will generate highest expected return given your specified tolerance for risk.