Correlation Between Intevac and Melrose Industries

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Can any of the company-specific risk be diversified away by investing in both Intevac and Melrose Industries 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 Melrose Industries into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Intevac and Melrose Industries PLC, you can compare the effects of market volatilities on Intevac and Melrose Industries 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 Melrose Industries. Check out your portfolio center. Please also check ongoing floating volatility patterns of Intevac and Melrose Industries.

Diversification Opportunities for Intevac and Melrose Industries

IntevacMelroseDiversified AwayIntevacMelroseDiversified Away100%
0.08
  Correlation Coefficient

Significant diversification

The 3 months correlation between Intevac and Melrose is 0.08. Overlapping area represents the amount of risk that can be diversified away by holding Intevac and Melrose Industries PLC in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Melrose Industries PLC 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 Melrose Industries. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Melrose Industries PLC has no effect on the direction of Intevac i.e., Intevac and Melrose Industries go up and down completely randomly.

Pair Corralation between Intevac and Melrose Industries

Given the investment horizon of 90 days Intevac is expected to generate 1.06 times more return on investment than Melrose Industries. However, Intevac is 1.06 times more volatile than Melrose Industries PLC. It trades about 0.2 of its potential returns per unit of risk. Melrose Industries PLC is currently generating about 0.08 per unit of risk. If you would invest  252.00  in Intevac on November 18, 2024 and sell it today you would earn a total of  152.00  from holding Intevac or generate 60.32% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthInsignificant
Accuracy98.36%
ValuesDaily Returns

Intevac  vs.  Melrose Industries PLC

 Performance 
JavaScript chart by amCharts 3.21.15Dec2025Feb -30-20-1001020
JavaScript chart by amCharts 3.21.15IVAC MLSPF
       Timeline  
Intevac 

Risk-Adjusted Performance

Solid

 
Weak
 
Strong
Compared to the overall equity markets, risk-adjusted returns on investments in Intevac are ranked lower than 16 (%) of all global equities and portfolios over the last 90 days. In spite of rather unsteady basic indicators, Intevac exhibited solid returns over the last few months and may actually be approaching a breakup point.
JavaScript chart by amCharts 3.21.15DecJanFebJanFeb2.62.833.23.43.63.84
Melrose Industries PLC 

Risk-Adjusted Performance

Modest

 
Weak
 
Strong
Compared to the overall equity markets, risk-adjusted returns on investments in Melrose Industries PLC are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. Despite nearly conflicting basic indicators, Melrose Industries reported solid returns over the last few months and may actually be approaching a breakup point.
JavaScript chart by amCharts 3.21.15DecJanFebJanFeb6.577.58

Intevac and Melrose Industries Volatility Contrast

   Predicted Return Density   
JavaScript chart by amCharts 3.21.15-12.69-9.51-6.32-3.130.03.416.9410.4714.017.53 0.0160.0180.0200.022
JavaScript chart by amCharts 3.21.15IVAC MLSPF
       Returns  

Pair Trading with Intevac and Melrose Industries

The main advantage of trading using opposite Intevac and Melrose Industries positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Intevac position performs unexpectedly, Melrose Industries 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 Melrose Industries will offset losses from the drop in Melrose Industries' long position.
The idea behind Intevac and Melrose Industries PLC 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 Headlines Timeline module to stay connected to all market stories and filter out noise. Drill down to analyze hype elasticity.

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