Correlation Between Intevac and Watts Water

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

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

Diversification Opportunities for Intevac and Watts Water

0.53

Correlation Coefficient

Intevac  Watts Water

Very weak diversification

The 3 months correlation between Intevac and Watts is 0.53. Overlapping area represents the amount of risk that can be diversified away by holding Intevac and Watts Water Technologies in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Watts Water Technologies 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 Watts Water. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Watts Water Technologies has no effect on the direction of Intevac i.e., Intevac and Watts Water go up and down completely randomly.

Pair Corralation between Intevac and Watts Water

Given the investment horizon of 90 days Intevac is expected to generate 1.66 times more return on investment than Watts Water. However, Intevac is 1.66 times more volatile than Watts Water Technologies. It trades about 0.12 of its potential returns per unit of risk. Watts Water Technologies is currently generating about 0.04 per unit of risk. If you would invest  335.00  in Intevac on December 28, 2024 and sell it today you would earn a total of  65.00  from holding Intevac or generate 19.4% return on investment over 90 days.

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

Intevac  vs.  Watts Water Technologies

Intevac

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Intevac are ranked lower than 9 (%) 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.

Watts Water Technologies

Risk-Adjusted Performance

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Watts Water Technologies are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively stable basic indicators, Watts Water is not utilizing all of its potentials. The current stock price uproar, may contribute to short-horizon losses for the private investors.

Pair Trading with Intevac and Watts Water

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

The idea behind Intevac and Watts Water 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 Equity Search module to search for actively traded equities including funds and ETFs from over 30 global markets.