Correlation Between Gorman Rupp and IDEX

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

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

Diversification Opportunities for Gorman Rupp and IDEX

0.87

Correlation Coefficient

Gorman Rupp  IDEX

Very poor diversification

The 3 months correlation between Gorman and IDEX is 0.87. Overlapping area represents the amount of risk that can be diversified away by holding Gorman Rupp and IDEX Corp. in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on IDEX and Gorman Rupp 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 Gorman Rupp 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 Gorman Rupp i.e., Gorman Rupp and IDEX go up and down completely randomly.

Pair Corralation between Gorman Rupp and IDEX

Considering the 90-day investment horizon Gorman Rupp is expected to generate 1.39 times less return on investment than IDEX. In addition to that, Gorman Rupp is 1.24 times more volatile than IDEX Corporation. It trades about 0.09 of its total potential returns per unit of risk. IDEX Corporation is currently generating about 0.16 per unit of volatility. If you would invest  20,292  in IDEX Corporation on August 27, 2024 and sell it today you would earn a total of  3,314  from holding IDEX Corporation or generate 16.33% return on investment over 90 days.

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

Gorman Rupp  vs.  IDEX Corp.

Gorman Rupp

Risk-Adjusted Performance

7 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Gorman Rupp are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. In spite of rather inconsistent basic indicators, Gorman Rupp may actually be approaching a critical reversion point that can send shares even higher in December 2024.

IDEX

Risk-Adjusted Performance

12 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in IDEX Corporation are ranked lower than 12 (%) of all global equities and portfolios over the last 90 days. In spite of fairly uncertain technical and fundamental indicators, IDEX showed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Gorman Rupp and IDEX

The main advantage of trading using opposite Gorman Rupp and IDEX positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Gorman Rupp 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 Gorman Rupp 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 Piotroski F Score module to get Piotroski F Score based on the binary analysis strategy of nine different fundamentals.