Correlation Between Intevac and Cummins

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

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

Diversification Opportunities for Intevac and Cummins

-0.59

Correlation Coefficient

Intevac  Cummins

Excellent diversification

The 3 months correlation between Intevac and Cummins is -0.59. Overlapping area represents the amount of risk that can be diversified away by holding Intevac and Cummins in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Cummins and Intevac 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 Intevac are associated (or correlated) with Cummins. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Cummins has no effect on the direction of Intevac i.e., Intevac and Cummins go up and down completely randomly.

Pair Corralation between Intevac and Cummins

Given the investment horizon of 90 days Intevac is expected to generate 2.18 times more return on investment than Cummins. However, Intevac is 2.18 times more volatile than Cummins. It trades about 0.18 of its potential returns per unit of risk. Cummins is currently generating about 0.27 per unit of risk. If you would invest  326.00  in Intevac on October 20, 2024 and sell it today you would earn a total of  23.00  from holding Intevac or generate 7.06% return on investment over 90 days.

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

Intevac  vs.  Cummins

Intevac

Risk-Adjusted Performance

2 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Intevac are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. In spite of rather unsteady basic indicators, Intevac may actually be approaching a critical reversion point that can send shares even higher in February 2025.

Cummins

Risk-Adjusted Performance

8 of 100

OK

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

Pair Trading with Intevac and Cummins

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

The idea behind Intevac and Cummins 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 Instant Ratings module to determine any equity ratings based on digital recommendations. Macroaxis instant equity ratings are based on combination of fundamental analysis and risk-adjusted market performance.