Correlation Between Omega Flex and Tennant

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

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

Diversification Opportunities for Omega Flex and Tennant

-0.3

Correlation Coefficient

Omega Flex  Tennant

Very good diversification

The 3 months correlation between Omega and Tennant is -0.3. Overlapping area represents the amount of risk that can be diversified away by holding Omega Flex and Tennant Company in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Tennant Company 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 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 Omega Flex i.e., Omega Flex and Tennant go up and down completely randomly.

Pair Corralation between Omega Flex and Tennant

Given the investment horizon of 90 days Omega Flex is expected to generate 1.04 times more return on investment than Tennant. However, Omega Flex is 1.04 times more volatile than Tennant Company. It trades about 0.1 of its potential returns per unit of risk. Tennant Company is currently generating about -0.05 per unit of risk. If you would invest  4,434  in Omega Flex on September 2, 2024 and sell it today you would earn a total of  508.00  from holding Omega Flex or generate 11.46% return on investment over 90 days.

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

Omega Flex  vs.  Tennant Company

Omega Flex

Risk-Adjusted Performance

7 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Omega Flex are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. In spite of fairly unfluctuating essential indicators, Omega Flex may actually be approaching a critical reversion point that can send shares even higher in January 2025.

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 Omega Flex and Tennant

The main advantage of trading using opposite Omega Flex and Tennant positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Omega Flex 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 Omega Flex 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 My Watchlist Analysis module to analyze my current watchlist and to refresh optimization strategy. Macroaxis watchlist is based on self-learning algorithm to remember stocks you like.