Correlation Between Energizer Holdings and Preformed Line
Can any of the company-specific risk be diversified away by investing in both Energizer Holdings and Preformed Line 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 Energizer Holdings and Preformed Line into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Energizer Holdings and Preformed Line Products, you can compare the effects of market volatilities on Energizer Holdings and Preformed Line 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 Energizer Holdings with a short position of Preformed Line. Check out your portfolio center. Please also check ongoing floating volatility patterns of Energizer Holdings and Preformed Line.
Diversification Opportunities for Energizer Holdings and Preformed Line
0.71 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Energizer and Preformed is 0.71. Overlapping area represents the amount of risk that can be diversified away by holding Energizer Holdings and Preformed Line Products in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Preformed Line Products and Energizer Holdings 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 Energizer Holdings are associated (or correlated) with Preformed Line. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Preformed Line Products has no effect on the direction of Energizer Holdings i.e., Energizer Holdings and Preformed Line go up and down completely randomly.
Pair Corralation between Energizer Holdings and Preformed Line
Considering the 90-day investment horizon Energizer Holdings is expected to generate 2.48 times less return on investment than Preformed Line. But when comparing it to its historical volatility, Energizer Holdings is 1.7 times less risky than Preformed Line. It trades about 0.03 of its potential returns per unit of risk. Preformed Line Products is currently generating about 0.04 of returns per unit of risk over similar time horizon. If you would invest 9,264 in Preformed Line Products on August 27, 2024 and sell it today you would earn a total of 4,588 from holding Preformed Line Products or generate 49.53% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Energizer Holdings vs. Preformed Line Products
Performance |
| Timeline |
| Energizer Holdings |
| Preformed Line Products |
Energizer Holdings and Preformed Line Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Energizer Holdings and Preformed Line
The main advantage of trading using opposite Energizer Holdings and Preformed Line positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Energizer Holdings position performs unexpectedly, Preformed Line 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 Preformed Line will offset losses from the drop in Preformed Line's long position.| Energizer Holdings vs. Acuity Brands | Energizer Holdings vs. Espey Mfg Electronics | Energizer Holdings vs. Preformed Line Products | Energizer Holdings vs. Kimball Electronics |
| Preformed Line vs. Kimball Electronics | Preformed Line vs. nVent Electric PLC | Preformed Line vs. Espey Mfg Electronics | Preformed Line vs. Hubbell |
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 Price Transformation module to use Price Transformation models to analyze the depth of different equity instruments across global markets.
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