Correlation Between Enerpac Tool and SPX Corp
Can any of the company-specific risk be diversified away by investing in both Enerpac Tool and SPX Corp 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 SPX Corp 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 SPX Corp, you can compare the effects of market volatilities on Enerpac Tool and SPX Corp 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 SPX Corp. Check out your portfolio center. Please also check ongoing floating volatility patterns of Enerpac Tool and SPX Corp.
Diversification Opportunities for Enerpac Tool and SPX Corp
0.66 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Enerpac and SPX is 0.66. Overlapping area represents the amount of risk that can be diversified away by holding Enerpac Tool Group and SPX Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on SPX Corp 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 SPX Corp. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of SPX Corp has no effect on the direction of Enerpac Tool i.e., Enerpac Tool and SPX Corp go up and down completely randomly.
Pair Corralation between Enerpac Tool and SPX Corp
Given the investment horizon of 90 days Enerpac Tool is expected to generate 1.23 times less return on investment than SPX Corp. But when comparing it to its historical volatility, Enerpac Tool Group is 1.52 times less risky than SPX Corp. It trades about 0.12 of its potential returns per unit of risk. SPX Corp is currently generating about 0.09 of returns per unit of risk over similar time horizon. If you would invest 13,636 in SPX Corp on September 1, 2024 and sell it today you would earn a total of 4,008 from holding SPX Corp or generate 29.39% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Enerpac Tool Group vs. SPX Corp
Performance |
| Timeline |
| Enerpac Tool Group |
| SPX Corp |
Enerpac Tool and SPX Corp Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Enerpac Tool and SPX Corp
The main advantage of trading using opposite Enerpac Tool and SPX Corp positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Enerpac Tool position performs unexpectedly, SPX Corp 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 SPX Corp will offset losses from the drop in SPX Corp's long position.The idea behind Enerpac Tool Group and SPX Corp pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.| SPX Corp vs. Standex International | SPX Corp vs. Enpro Industries | SPX Corp vs. Thermon Group Holdings | SPX Corp vs. Enerpac Tool Group |
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 Crypto Correlations module to use cryptocurrency correlation module to diversify your cryptocurrency portfolio across multiple coins.
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