Correlation Between Enerpac Tool and Gates Industrial
Can any of the company-specific risk be diversified away by investing in both Enerpac Tool and Gates Industrial 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 Enerpac Tool and Gates Industrial into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Enerpac Tool Group and Gates Industrial, you can compare the effects of market volatilities on Enerpac Tool and Gates Industrial 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 Enerpac Tool with a short position of Gates Industrial. Check out your portfolio center. Please also check ongoing floating volatility patterns of Enerpac Tool and Gates Industrial.
Diversification Opportunities for Enerpac Tool and Gates Industrial
0.94 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between Enerpac and Gates is 0.94. Overlapping area represents the amount of risk that can be diversified away by holding Enerpac Tool Group and Gates Industrial in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Gates Industrial and Enerpac Tool 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 Enerpac Tool Group are associated (or correlated) with Gates Industrial. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Gates Industrial has no effect on the direction of Enerpac Tool i.e., Enerpac Tool and Gates Industrial go up and down completely randomly.
Pair Corralation between Enerpac Tool and Gates Industrial
Given the investment horizon of 90 days Enerpac Tool is expected to generate 1.4 times less return on investment than Gates Industrial. In addition to that, Enerpac Tool is 1.6 times more volatile than Gates Industrial. It trades about 0.18 of its total potential returns per unit of risk. Gates Industrial is currently generating about 0.41 per unit of volatility. If you would invest 1,930 in Gates Industrial on August 31, 2024 and sell it today you would earn a total of 286.00 from holding Gates Industrial or generate 14.82% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Enerpac Tool Group vs. Gates Industrial
Performance |
| Timeline |
| Enerpac Tool Group |
| Gates Industrial |
Enerpac Tool and Gates Industrial Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Enerpac Tool and Gates Industrial
The main advantage of trading using opposite Enerpac Tool and Gates Industrial positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Enerpac Tool position performs unexpectedly, Gates Industrial 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 Gates Industrial will offset losses from the drop in Gates Industrial's long position.| Enerpac Tool vs. Flowserve | Enerpac Tool vs. Franklin Electric Co | Enerpac Tool vs. Watts Water Technologies | Enerpac Tool vs. Gorman Rupp |
| Gates Industrial vs. Crane NXT Co | Gates Industrial vs. Donaldson | Gates Industrial vs. ITT Inc | Gates Industrial vs. Franklin Electric Co |
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 My Watchlist Analysis module to analyze my current watchlist and to refresh optimization strategy. Macroaxis watchlist is based on self-learning algorithm to remember stocks you like.
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