Correlation Between Smith AO and Enerpac Tool
Can any of the company-specific risk be diversified away by investing in both Smith AO and Enerpac Tool 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 Smith AO and Enerpac Tool into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Smith AO and Enerpac Tool Group, you can compare the effects of market volatilities on Smith AO and Enerpac Tool 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 Smith AO with a short position of Enerpac Tool. Check out your portfolio center. Please also check ongoing floating volatility patterns of Smith AO and Enerpac Tool.
Diversification Opportunities for Smith AO and Enerpac Tool
0.67 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Smith and Enerpac is 0.67. Overlapping area represents the amount of risk that can be diversified away by holding Smith AO and Enerpac Tool Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Enerpac Tool Group and Smith AO 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 Smith AO are associated (or correlated) with Enerpac Tool. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Enerpac Tool Group has no effect on the direction of Smith AO i.e., Smith AO and Enerpac Tool go up and down completely randomly.
Pair Corralation between Smith AO and Enerpac Tool
Considering the 90-day investment horizon Smith AO is expected to under-perform the Enerpac Tool. But the stock apears to be less risky and, when comparing its historical volatility, Smith AO is 1.06 times less risky than Enerpac Tool. The stock trades about -0.3 of its potential returns per unit of risk. The Enerpac Tool Group is currently generating about 0.16 of returns per unit of risk over similar time horizon. If you would invest 4,428 in Enerpac Tool Group on November 18, 2024 and sell it today you would earn a total of 186.00 from holding Enerpac Tool Group or generate 4.2% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Smith AO vs. Enerpac Tool Group
Performance |
| Timeline |
| Smith AO |
| Enerpac Tool Group |
Smith AO and Enerpac Tool Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Smith AO and Enerpac Tool
The main advantage of trading using opposite Smith AO and Enerpac Tool positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Smith AO position performs unexpectedly, Enerpac Tool 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 Enerpac Tool will offset losses from the drop in Enerpac Tool's long position.| Smith AO vs. Dover | Smith AO vs. Illinois Tool Works | Smith AO vs. Xylem Inc | Smith AO vs. Franklin Electric Co |
| Enerpac Tool vs. Omega Flex | Enerpac Tool vs. Luxfer Holdings PLC | Enerpac Tool vs. Gorman Rupp | Enerpac Tool vs. CSW Industrials |
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 Sign In To Macroaxis module to sign in to explore Macroaxis' wealth optimization platform and fintech modules.
Other Complementary Tools
| Balance Of Power Check stock momentum by analyzing Balance Of Power indicator and other technical ratios | |
| Portfolio File Import Quickly import all of your third-party portfolios from your local drive in csv format | |
| Portfolio Diagnostics Use generated alerts and portfolio events aggregator to diagnose current holdings | |
| Equity Analysis Research over 250,000 global equities including funds, stocks and ETFs to find investment opportunities | |
| Sectors List of equity sectors categorizing publicly traded companies based on their primary business activities |