Correlation Between Sydbank and Eaton Corp
Can any of the company-specific risk be diversified away by investing in both Sydbank and Eaton Corp 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 Sydbank and Eaton Corp into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Sydbank and Eaton Corp PLC, you can compare the effects of market volatilities on Sydbank and Eaton Corp 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 Sydbank with a short position of Eaton Corp. Check out your portfolio center. Please also check ongoing floating volatility patterns of Sydbank and Eaton Corp.
Diversification Opportunities for Sydbank and Eaton Corp
0.58 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Sydbank and Eaton is 0.58. Overlapping area represents the amount of risk that can be diversified away by holding Sydbank and Eaton Corp PLC in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Eaton Corp PLC and Sydbank 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 Sydbank are associated (or correlated) with Eaton Corp. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Eaton Corp PLC has no effect on the direction of Sydbank i.e., Sydbank and Eaton Corp go up and down completely randomly.
Pair Corralation between Sydbank and Eaton Corp
Assuming the 90 days trading horizon Sydbank is expected to generate 2.44 times less return on investment than Eaton Corp. But when comparing it to its historical volatility, Sydbank is 1.98 times less risky than Eaton Corp. It trades about 0.19 of its potential returns per unit of risk. Eaton Corp PLC is currently generating about 0.24 of returns per unit of risk over similar time horizon. If you would invest 33,284 in Eaton Corp PLC on September 5, 2024 and sell it today you would earn a total of 3,961 from holding Eaton Corp PLC or generate 11.9% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Sydbank vs. Eaton Corp PLC
Performance |
| Timeline |
| Sydbank |
| Eaton Corp PLC |
Sydbank and Eaton Corp Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Sydbank and Eaton Corp
The main advantage of trading using opposite Sydbank and Eaton Corp positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Sydbank position performs unexpectedly, Eaton Corp 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 Eaton Corp will offset losses from the drop in Eaton Corp's long position.| Sydbank vs. McEwen Mining | Sydbank vs. Playtech Plc | Sydbank vs. Hochschild Mining plc | Sydbank vs. Neometals |
| Eaton Corp vs. Samsung Electronics Co | Eaton Corp vs. Samsung Electronics Co | Eaton Corp vs. Hyundai Motor | Eaton Corp vs. Toyota Motor Corp |
Check out your portfolio center.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.
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