Correlation Between Enerpac Tool and ITM Power
Can any of the company-specific risk be diversified away by investing in both Enerpac Tool and ITM Power 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 ITM Power 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 ITM Power Plc, you can compare the effects of market volatilities on Enerpac Tool and ITM Power 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 ITM Power. Check out your portfolio center. Please also check ongoing floating volatility patterns of Enerpac Tool and ITM Power.
Diversification Opportunities for Enerpac Tool and ITM Power
-0.87 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between Enerpac and ITM is -0.87. Overlapping area represents the amount of risk that can be diversified away by holding Enerpac Tool Group and ITM Power Plc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ITM Power Plc 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 ITM Power. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of ITM Power Plc has no effect on the direction of Enerpac Tool i.e., Enerpac Tool and ITM Power go up and down completely randomly.
Pair Corralation between Enerpac Tool and ITM Power
Given the investment horizon of 90 days Enerpac Tool Group is expected to generate 0.61 times more return on investment than ITM Power. However, Enerpac Tool Group is 1.63 times less risky than ITM Power. It trades about 0.18 of its potential returns per unit of risk. ITM Power Plc is currently generating about -0.24 per unit of risk. If you would invest 4,426 in Enerpac Tool Group on September 2, 2024 and sell it today you would earn a total of 400.00 from holding Enerpac Tool Group or generate 9.04% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Enerpac Tool Group vs. ITM Power Plc
Performance |
| Timeline |
| Enerpac Tool Group |
| ITM Power Plc |
Enerpac Tool and ITM Power Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Enerpac Tool and ITM Power
The main advantage of trading using opposite Enerpac Tool and ITM Power positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Enerpac Tool position performs unexpectedly, ITM Power 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 ITM Power will offset losses from the drop in ITM Power's long position.| Enerpac Tool vs. Omega Flex | Enerpac Tool vs. Luxfer Holdings PLC | Enerpac Tool vs. Gorman Rupp | Enerpac Tool vs. John Bean Technologies |
| ITM Power vs. Next Hydrogen Solutions | ITM Power vs. Nel ASA | ITM Power vs. Titan Logix Corp | ITM Power vs. Weir Group 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 Top Crypto Exchanges module to search and analyze digital assets across top global cryptocurrency exchanges.
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