Correlation Between SHELF DRILLING and Eaton PLC
Can any of the company-specific risk be diversified away by investing in both SHELF DRILLING and Eaton PLC 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 SHELF DRILLING and Eaton PLC into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between SHELF DRILLING LTD and Eaton PLC, you can compare the effects of market volatilities on SHELF DRILLING and Eaton PLC 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 SHELF DRILLING with a short position of Eaton PLC. Check out your portfolio center. Please also check ongoing floating volatility patterns of SHELF DRILLING and Eaton PLC.
Diversification Opportunities for SHELF DRILLING and Eaton PLC
-0.48 | Correlation Coefficient |
Very good diversification
The 3 months correlation between SHELF and Eaton is -0.48. Overlapping area represents the amount of risk that can be diversified away by holding SHELF DRILLING LTD and Eaton PLC in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Eaton PLC and SHELF DRILLING 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 SHELF DRILLING LTD are associated (or correlated) with Eaton PLC. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Eaton PLC has no effect on the direction of SHELF DRILLING i.e., SHELF DRILLING and Eaton PLC go up and down completely randomly.
Pair Corralation between SHELF DRILLING and Eaton PLC
Assuming the 90 days horizon SHELF DRILLING LTD is expected to under-perform the Eaton PLC. In addition to that, SHELF DRILLING is 2.23 times more volatile than Eaton PLC. It trades about -0.31 of its total potential returns per unit of risk. Eaton PLC is currently generating about 0.2 per unit of volatility. If you would invest 32,136 in Eaton PLC on August 29, 2024 and sell it today you would earn a total of 3,639 from holding Eaton PLC or generate 11.32% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 95.65% |
| Values | Daily Returns |
SHELF DRILLING LTD vs. Eaton PLC
Performance |
| Timeline |
| SHELF DRILLING LTD |
| Eaton PLC |
SHELF DRILLING and Eaton PLC Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with SHELF DRILLING and Eaton PLC
The main advantage of trading using opposite SHELF DRILLING and Eaton PLC positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if SHELF DRILLING position performs unexpectedly, Eaton PLC 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 PLC will offset losses from the drop in Eaton PLC's long position.| SHELF DRILLING vs. Jacquet Metal Service | SHELF DRILLING vs. GREENX METALS LTD | SHELF DRILLING vs. MELIA HOTELS | SHELF DRILLING vs. Sunstone Hotel Investors |
| Eaton PLC vs. Mobilezone Holding AG | Eaton PLC vs. Luckin Coffee | Eaton PLC vs. ETFS Coffee ETC | Eaton PLC vs. Iridium Communications |
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 Portfolio Holdings module to check your current holdings and cash postion to detemine if your portfolio needs rebalancing.
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