Correlation Between Omega Flex and Middleby Corp

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

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

Diversification Opportunities for Omega Flex and Middleby Corp

0.27

Correlation Coefficient

Omega Flex  Middleby Corp

Modest diversification

The 3 months correlation between Omega and Middleby is 0.27. Overlapping area represents the amount of risk that can be diversified away by holding Omega Flex and Middleby Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Middleby Corp and Omega Flex 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 Omega Flex are associated (or correlated) with Middleby Corp. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Middleby Corp has no effect on the direction of Omega Flex i.e., Omega Flex and Middleby Corp go up and down completely randomly.

Pair Corralation between Omega Flex and Middleby Corp

Given the investment horizon of 90 days Omega Flex is expected to under-perform the Middleby Corp. In addition to that, Omega Flex is 1.47 times more volatile than Middleby Corp. It trades about -0.23 of its total potential returns per unit of risk. Middleby Corp is currently generating about -0.02 per unit of volatility. If you would invest  13,709  in Middleby Corp on October 6, 2024 and sell it today you would lose (272.00) from holding Middleby Corp or give up 1.98% of portfolio value over 90 days.

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

Omega Flex  vs.  Middleby Corp

Omega Flex

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Omega Flex 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 essential indicators remain fairly strong which may send shares a bit higher in February 2025. The current disturbance may also be a sign of long term up-swing for the company investors.

Middleby Corp

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Middleby Corp are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. In spite of rather sound fundamental indicators, Middleby Corp is not utilizing all of its potentials. The recent stock price tumult, may contribute to shorter-term losses for the shareholders.

Pair Trading with Omega Flex and Middleby Corp

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

The idea behind Omega Flex and Middleby Corp 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 Risk-Return Analysis module to view associations between returns expected from investment and the risk you assume.