Correlation Between Orion Group and Innovate Corp

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

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

Diversification Opportunities for Orion Group and Innovate Corp

0.12

Correlation Coefficient

Orion Group  Innovate Corp

Average diversification

The 3 months correlation between Orion and Innovate is 0.12. Overlapping area represents the amount of risk that can be diversified away by holding Orion Group Holdings and Innovate Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Innovate Corp and Orion Group 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 Orion Group Holdings are associated (or correlated) with Innovate Corp. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Innovate Corp has no effect on the direction of Orion Group i.e., Orion Group and Innovate Corp go up and down completely randomly.

Pair Corralation between Orion Group and Innovate Corp

Considering the 90-day investment horizon Orion Group Holdings is expected to generate 0.7 times more return on investment than Innovate Corp. However, Orion Group Holdings is 1.43 times less risky than Innovate Corp. It trades about 0.07 of its potential returns per unit of risk. Innovate Corp is currently generating about -0.02 per unit of risk. If you would invest  273.00  in Orion Group Holdings on September 30, 2024 and sell it today you would earn a total of  480.00  from holding Orion Group Holdings or generate 175.82% return on investment over 90 days.

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

Orion Group Holdings  vs.  Innovate Corp

Orion Group Holdings

Risk-Adjusted Performance

9 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Orion Group Holdings are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. In spite of very fragile basic indicators, Orion Group displayed solid returns over the last few months and may actually be approaching a breakup point.

Innovate Corp

Risk-Adjusted Performance

8 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Innovate Corp are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. In spite of rather unsteady basic indicators, Innovate Corp exhibited solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Orion Group and Innovate Corp

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

The idea behind Orion Group Holdings and Innovate 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 USA ETFs module to find actively traded Exchange Traded Funds (ETF) in USA.