Correlation Between Smith AO and Enpro Industries
Can any of the company-specific risk be diversified away by investing in both Smith AO and Enpro Industries 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 Enpro Industries into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Smith AO and Enpro Industries, you can compare the effects of market volatilities on Smith AO and Enpro Industries 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 Enpro Industries. Check out your portfolio center. Please also check ongoing floating volatility patterns of Smith AO and Enpro Industries.
Diversification Opportunities for Smith AO and Enpro Industries
-0.42 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Smith and Enpro is -0.42. Overlapping area represents the amount of risk that can be diversified away by holding Smith AO and Enpro Industries in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Enpro Industries 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 Enpro Industries. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Enpro Industries has no effect on the direction of Smith AO i.e., Smith AO and Enpro Industries go up and down completely randomly.
Pair Corralation between Smith AO and Enpro Industries
Considering the 90-day investment horizon Smith AO is expected to under-perform the Enpro Industries. But the stock apears to be less risky and, when comparing its historical volatility, Smith AO is 1.31 times less risky than Enpro Industries. The stock trades about -0.02 of its potential returns per unit of risk. The Enpro Industries is currently generating about 0.51 of returns per unit of risk over similar time horizon. If you would invest 16,298 in Enpro Industries on September 13, 2024 and sell it today you would earn a total of 2,865 from holding Enpro Industries or generate 17.58% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Smith AO vs. Enpro Industries
Performance |
| Timeline |
| Smith AO |
| Enpro Industries |
Smith AO and Enpro Industries Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Smith AO and Enpro Industries
The main advantage of trading using opposite Smith AO and Enpro Industries positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Smith AO position performs unexpectedly, Enpro Industries 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 Enpro Industries will offset losses from the drop in Enpro Industries' long position.| Smith AO vs. Dover | Smith AO vs. Illinois Tool Works | Smith AO vs. Xylem Inc | Smith AO vs. Franklin Electric Co |
| Enpro Industries vs. Hurco Companies | Enpro Industries vs. Enerpac Tool Group | Enpro Industries vs. China Yuchai International | Enpro Industries vs. Luxfer Holdings PLC |
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 Equity Analysis module to research over 250,000 global equities including funds, stocks and ETFs to find investment opportunities.
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