Correlation Between Intevac and Tennant

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

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

Diversification Opportunities for Intevac and Tennant

0.65

Correlation Coefficient

Intevac  Tennant

Poor diversification

The 3 months correlation between Intevac and Tennant is 0.65. Overlapping area represents the amount of risk that can be diversified away by holding Intevac and Tennant Company in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Tennant Company 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 Tennant. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Tennant Company has no effect on the direction of Intevac i.e., Intevac and Tennant go up and down completely randomly.

Pair Corralation between Intevac and Tennant

Given the investment horizon of 90 days Intevac is expected to under-perform the Tennant. In addition to that, Intevac is 1.91 times more volatile than Tennant Company. It trades about -0.1 of its total potential returns per unit of risk. Tennant Company is currently generating about -0.03 per unit of volatility. If you would invest  9,213  in Tennant Company on September 5, 2024 and sell it today you would lose (394.00) from holding Tennant Company or give up 4.28% of portfolio value over 90 days.

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

Intevac  vs.  Tennant Company

Intevac

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Intevac has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of unsteady performance in the last few months, the Stock's basic indicators remain rather sound which may send shares a bit higher in January 2025. The latest tumult may also be a sign of longer-term up-swing for the firm shareholders.

Tennant Company

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Tennant Company has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of rather sound basic indicators, Tennant is not utilizing all of its potentials. The latest stock price tumult, may contribute to shorter-term losses for the shareholders.

Pair Trading with Intevac and Tennant

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

The idea behind Intevac and Tennant Company 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 Sign In To Macroaxis module to sign in to explore Macroaxis' wealth optimization platform and fintech modules.