Correlation Between Aumann AG and Eaton PLC
Can any of the company-specific risk be diversified away by investing in both Aumann AG 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 Aumann AG and Eaton PLC into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Aumann AG and Eaton PLC, you can compare the effects of market volatilities on Aumann AG 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 Aumann AG with a short position of Eaton PLC. Check out your portfolio center. Please also check ongoing floating volatility patterns of Aumann AG and Eaton PLC.
Diversification Opportunities for Aumann AG and Eaton PLC
Very weak diversification
The 3 months correlation between Aumann and Eaton is 0.53. Overlapping area represents the amount of risk that can be diversified away by holding Aumann AG and Eaton PLC in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Eaton PLC and Aumann AG 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 Aumann AG 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 Aumann AG i.e., Aumann AG and Eaton PLC go up and down completely randomly.
Pair Corralation between Aumann AG and Eaton PLC
Assuming the 90 days horizon Aumann AG is expected to generate 0.52 times more return on investment than Eaton PLC. However, Aumann AG is 1.91 times less risky than Eaton PLC. It trades about 0.23 of its potential returns per unit of risk. Eaton PLC is currently generating about -0.02 per unit of risk. If you would invest 1,050 in Aumann AG on November 2, 2024 and sell it today you would earn a total of 95.00 from holding Aumann AG or generate 9.05% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 95.0% |
| Values | Daily Returns |
Aumann AG vs. Eaton PLC
Performance |
| Timeline |
| Aumann AG |
| Eaton PLC |
Aumann AG and Eaton PLC Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Aumann AG and Eaton PLC
The main advantage of trading using opposite Aumann AG and Eaton PLC positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Aumann AG 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.| Aumann AG vs. Alfa Laval AB | Aumann AG vs. Arista Power | Aumann AG vs. Atlas Copco AB | Aumann AG vs. American Commerce Solutions |
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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 Idea Breakdown module to analyze constituents of all Macroaxis ideas. Macroaxis investment ideas are predefined, sector-focused investing themes.
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