Correlation Between Data Communications and IDEX Metals

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

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

Diversification Opportunities for Data Communications and IDEX Metals

0.09

Correlation Coefficient

Data Communications  IDEX Metals

Significant diversification

The 3 months correlation between Data and IDEX is 0.09. Overlapping area represents the amount of risk that can be diversified away by holding Data Communications Management and IDEX Metals Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on IDEX Metals Corp and Data Communications 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 Data Communications Management are associated (or correlated) with IDEX Metals. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of IDEX Metals Corp has no effect on the direction of Data Communications i.e., Data Communications and IDEX Metals go up and down completely randomly.

Pair Corralation between Data Communications and IDEX Metals

Assuming the 90 days trading horizon Data Communications Management is expected to under-perform the IDEX Metals. In addition to that, Data Communications is 1.1 times more volatile than IDEX Metals Corp. It trades about -0.11 of its total potential returns per unit of risk. IDEX Metals Corp is currently generating about -0.07 per unit of volatility. If you would invest  49.00  in IDEX Metals Corp on May 12, 2025 and sell it today you would lose (5.00) from holding IDEX Metals Corp or give up 10.2% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Insignificant
Accuracy	68.25%
Values	Daily Returns

Data Communications Management  vs.  IDEX Metals Corp

Data Communications

Risk-Adjusted Performance

Weakest

Over the last 90 days Data Communications Management has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of unfluctuating performance in the last few months, the Stock's primary indicators remain very healthy which may send shares a bit higher in September 2025. The recent disarray may also be a sign of long period up-swing for the firm investors.

IDEX Metals Corp

Risk-Adjusted Performance

Weakest

Over the last 90 days IDEX Metals Corp has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of unfluctuating performance in the last few months, the Stock's technical and fundamental indicators remain fairly stable which may send shares a bit higher in September 2025. The latest fuss may also be a sign of long-term up-swing for the venture sophisticated investors.

Pair Trading with Data Communications and IDEX Metals

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

The idea behind Data Communications Management and IDEX Metals 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 Transaction History module to view history of all your transactions and understand their impact on performance.