Correlation Between Omega Flex and Transcat

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

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

Diversification Opportunities for Omega Flex and Transcat

0.65

Correlation Coefficient

Omega Flex  Transcat

Poor diversification

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

Pair Corralation between Omega Flex and Transcat

Given the investment horizon of 90 days Omega Flex is expected to generate 0.65 times more return on investment than Transcat. However, Omega Flex is 1.54 times less risky than Transcat. It trades about -0.05 of its potential returns per unit of risk. Transcat is currently generating about -0.19 per unit of risk. If you would invest  4,207  in Omega Flex on December 22, 2024 and sell it today you would lose (311.00) from holding Omega Flex or give up 7.39% of portfolio value over 90 days.

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

Omega Flex  vs.  Transcat

Omega Flex

Risk-Adjusted Performance

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 latest unfluctuating performance, the Stock's essential indicators remain strong and the current disturbance on Wall Street may also be a sign of long term gains for the company investors.

Transcat

Risk-Adjusted Performance

Very Weak

Over the last 90 days Transcat 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 comparatively stable which may send shares a bit higher in April 2025. The newest uproar may also be a sign of mid-term up-swing for the firm private investors.

Pair Trading with Omega Flex and Transcat

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

The idea behind Omega Flex and Transcat 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 ETFs module to find actively traded Exchange Traded Funds (ETF) from around the world.