Correlation Between Watts Water and Intevac

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

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

Diversification Opportunities for Watts Water and Intevac

-0.5

Correlation Coefficient

Watts Water  Intevac

Very good diversification

The 3 months correlation between Watts and Intevac is -0.5. Overlapping area represents the amount of risk that can be diversified away by holding Watts Water Technologies and Intevac in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Intevac and Watts Water 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 Watts Water Technologies are associated (or correlated) with Intevac. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Intevac has no effect on the direction of Watts Water i.e., Watts Water and Intevac go up and down completely randomly.

Pair Corralation between Watts Water and Intevac

Considering the 90-day investment horizon Watts Water Technologies is expected to generate 0.41 times more return on investment than Intevac. However, Watts Water Technologies is 2.44 times less risky than Intevac. It trades about 0.13 of its potential returns per unit of risk. Intevac is currently generating about -0.08 per unit of risk. If you would invest  19,305  in Watts Water Technologies on September 3, 2024 and sell it today you would earn a total of  2,274  from holding Watts Water Technologies or generate 11.78% return on investment over 90 days.

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

Watts Water Technologies  vs.  Intevac

Watts Water Technologies

Risk-Adjusted Performance

10 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Watts Water Technologies are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively weak basic indicators, Watts Water may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Intevac

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Intevac 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 rather sound which may send shares a bit higher in January 2025. The latest tumult may also be a sign of longer-term up-swing for the firm shareholders.

Pair Trading with Watts Water and Intevac

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

The idea behind Watts Water Technologies and Intevac 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 Global Markets Map module to get a quick overview of global market snapshot using zoomable world map. Drill down to check world indexes.