Correlation Between Standex International and IDEX

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

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

Diversification Opportunities for Standex International and IDEX

0.33

Correlation Coefficient

Standex International  IDEX

Weak diversification

The 3 months correlation between Standex and IDEX is 0.33. Overlapping area represents the amount of risk that can be diversified away by holding Standex International and IDEX Corp. in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on IDEX and Standex International 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 Standex International are associated (or correlated) with IDEX. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of IDEX has no effect on the direction of Standex International i.e., Standex International and IDEX go up and down completely randomly.

Pair Corralation between Standex International and IDEX

Considering the 90-day investment horizon Standex International is expected to generate 0.98 times more return on investment than IDEX. However, Standex International is 1.02 times less risky than IDEX. It trades about -0.1 of its potential returns per unit of risk. IDEX Corporation is currently generating about -0.11 per unit of risk. If you would invest  18,712  in Standex International on December 28, 2024 and sell it today you would lose (1,954) from holding Standex International or give up 10.44% of portfolio value over 90 days.

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

Standex International  vs.  IDEX Corp.

Standex International

Risk-Adjusted Performance

Very Weak

Over the last 90 days Standex International has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest unsteady performance, the Stock's basic indicators remain strong and the recent confusion on Wall Street may also be a sign of long-lasting gains for the firm traders.

IDEX

Risk-Adjusted Performance

Very Weak

Over the last 90 days IDEX Corporation has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest uncertain performance, the Stock's technical and fundamental indicators remain strong and the current disturbance on Wall Street may also be a sign of long term gains for the company investors.

Pair Trading with Standex International and IDEX

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

The idea behind Standex International and IDEX Corporation 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 Theme Ratings module to determine theme ratings based on digital equity recommendations. Macroaxis theme ratings are based on combination of fundamental analysis and risk-adjusted market performance.