Correlation Between Powell Industries and Servotronics

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

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

Diversification Opportunities for Powell Industries and Servotronics

0.0

Correlation Coefficient

Powell Industries  Servotronics

Pay attention - limited upside

The 3 months correlation between Powell and Servotronics is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding Powell Industries and Servotronics in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Servotronics and Powell Industries 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 Powell Industries are associated (or correlated) with Servotronics. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Servotronics has no effect on the direction of Powell Industries i.e., Powell Industries and Servotronics go up and down completely randomly.

Pair Corralation between Powell Industries and Servotronics

If you would invest  23,626  in Powell Industries on July 17, 2025 and sell it today you would earn a total of  8,094  from holding Powell Industries or generate 34.26% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Flat
Strength	Insignificant
Accuracy	1.56%
Values	Daily Returns

Powell Industries  vs.  Servotronics

Powell Industries

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Powell Industries are ranked lower than 13 (%) of all global equities and portfolios over the last 90 days. Despite quite weak basic indicators, Powell Industries disclosed solid returns over the last few months and may actually be approaching a breakup point.

Servotronics

Risk-Adjusted Performance

Weakest

Over the last 90 days Servotronics has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively stable basic indicators, Servotronics is not utilizing all of its potentials. The latest stock price uproar, may contribute to short-horizon losses for the private investors.

Pair Trading with Powell Industries and Servotronics

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

The idea behind Powell Industries and Servotronics 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 Commodity Directory module to find actively traded commodities issued by global exchanges.