Correlation Between EatonPLC and FuelCell Energy
Can any of the company-specific risk be diversified away by investing in both EatonPLC and FuelCell Energy 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 EatonPLC and FuelCell Energy into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Eaton PLC and FuelCell Energy, you can compare the effects of market volatilities on EatonPLC and FuelCell Energy 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 EatonPLC with a short position of FuelCell Energy. Check out your portfolio center. Please also check ongoing floating volatility patterns of EatonPLC and FuelCell Energy.
Diversification Opportunities for EatonPLC and FuelCell Energy
-0.09 | Correlation Coefficient |
Good diversification
The 3 months correlation between EatonPLC and FuelCell is -0.09. Overlapping area represents the amount of risk that can be diversified away by holding Eaton PLC and FuelCell Energy in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on FuelCell Energy and EatonPLC 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 Eaton PLC are associated (or correlated) with FuelCell Energy. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of FuelCell Energy has no effect on the direction of EatonPLC i.e., EatonPLC and FuelCell Energy go up and down completely randomly.
Pair Corralation between EatonPLC and FuelCell Energy
Assuming the 90 days horizon Eaton PLC is expected to generate 0.29 times more return on investment than FuelCell Energy. However, Eaton PLC is 3.41 times less risky than FuelCell Energy. It trades about 0.1 of its potential returns per unit of risk. FuelCell Energy is currently generating about -0.03 per unit of risk. If you would invest 13,956 in Eaton PLC on October 13, 2024 and sell it today you would earn a total of 19,134 from holding Eaton PLC or generate 137.1% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 99.8% |
| Values | Daily Returns |
Eaton PLC vs. FuelCell Energy
Performance |
| Timeline |
| Eaton PLC |
| FuelCell Energy |
EatonPLC and FuelCell Energy Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with EatonPLC and FuelCell Energy
The main advantage of trading using opposite EatonPLC and FuelCell Energy positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if EatonPLC position performs unexpectedly, FuelCell Energy 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 FuelCell Energy will offset losses from the drop in FuelCell Energy's long position.| EatonPLC vs. GOLD ROAD RES | EatonPLC vs. RETAIL FOOD GROUP | EatonPLC vs. TITANIUM TRANSPORTGROUP | EatonPLC vs. The Trade Desk |
| FuelCell Energy vs. Delta Electronics Public | FuelCell Energy vs. Superior Plus Corp | FuelCell Energy vs. NMI Holdings | FuelCell Energy vs. SIVERS SEMICONDUCTORS AB |
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 Latest Portfolios module to quick portfolio dashboard that showcases your latest portfolios.
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