Correlation Between Enerpac Tool and Watts Water
Can any of the company-specific risk be diversified away by investing in both Enerpac Tool and Watts Water 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 Watts Water 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 Watts Water Technologies, you can compare the effects of market volatilities on Enerpac Tool and Watts Water 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 Watts Water. Check out your portfolio center. Please also check ongoing floating volatility patterns of Enerpac Tool and Watts Water.
Diversification Opportunities for Enerpac Tool and Watts Water
0.68 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Enerpac and Watts is 0.68. Overlapping area represents the amount of risk that can be diversified away by holding Enerpac Tool Group and Watts Water Technologies in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Watts Water Technologies 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 Watts Water. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Watts Water Technologies has no effect on the direction of Enerpac Tool i.e., Enerpac Tool and Watts Water go up and down completely randomly.
Pair Corralation between Enerpac Tool and Watts Water
Given the investment horizon of 90 days Enerpac Tool Group is expected to generate 0.62 times more return on investment than Watts Water. However, Enerpac Tool Group is 1.62 times less risky than Watts Water. It trades about 0.16 of its potential returns per unit of risk. Watts Water Technologies is currently generating about 0.08 per unit of risk. If you would invest 4,428 in Enerpac Tool Group on November 18, 2024 and sell it today you would earn a total of 186.00 from holding Enerpac Tool Group or generate 4.2% 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. Watts Water Technologies
Performance |
| Timeline |
| Enerpac Tool Group |
| Watts Water Technologies |
Enerpac Tool and Watts Water Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Enerpac Tool and Watts Water
The main advantage of trading using opposite Enerpac Tool and Watts Water positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Enerpac Tool position performs unexpectedly, Watts Water 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 Watts Water will offset losses from the drop in Watts Water's long position.| Enerpac Tool vs. Omega Flex | Enerpac Tool vs. Luxfer Holdings PLC | Enerpac Tool vs. Gorman Rupp | Enerpac Tool vs. CSW Industrials |
| Watts Water vs. IDEX Corporation | Watts Water vs. Donaldson | Watts Water vs. Gorman Rupp | Watts Water 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 Global Markets Map module to get a quick overview of global market snapshot using zoomable world map. Drill down to check world indexes.
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