Correlation Between ESAB Corp and Ampco Pittsburgh
Can any of the company-specific risk be diversified away by investing in both ESAB Corp and Ampco Pittsburgh 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 ESAB Corp and Ampco Pittsburgh into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between ESAB Corp and Ampco Pittsburgh, you can compare the effects of market volatilities on ESAB Corp and Ampco Pittsburgh 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 ESAB Corp with a short position of Ampco Pittsburgh. Check out your portfolio center. Please also check ongoing floating volatility patterns of ESAB Corp and Ampco Pittsburgh.
Diversification Opportunities for ESAB Corp and Ampco Pittsburgh
-0.29 | Correlation Coefficient |
Very good diversification
The 3 months correlation between ESAB and Ampco is -0.29. Overlapping area represents the amount of risk that can be diversified away by holding ESAB Corp and Ampco Pittsburgh in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Ampco Pittsburgh and ESAB Corp 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 ESAB Corp are associated (or correlated) with Ampco Pittsburgh. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Ampco Pittsburgh has no effect on the direction of ESAB Corp i.e., ESAB Corp and Ampco Pittsburgh go up and down completely randomly.
Pair Corralation between ESAB Corp and Ampco Pittsburgh
Given the investment horizon of 90 days ESAB Corp is expected to generate 0.57 times more return on investment than Ampco Pittsburgh. However, ESAB Corp is 1.75 times less risky than Ampco Pittsburgh. It trades about 0.14 of its potential returns per unit of risk. Ampco Pittsburgh is currently generating about -0.03 per unit of risk. If you would invest 10,363 in ESAB Corp on August 23, 2024 and sell it today you would earn a total of 2,183 from holding ESAB Corp or generate 21.07% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
ESAB Corp vs. Ampco Pittsburgh
Performance |
| Timeline |
| ESAB Corp |
| Ampco Pittsburgh |
ESAB Corp and Ampco Pittsburgh Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with ESAB Corp and Ampco Pittsburgh
The main advantage of trading using opposite ESAB Corp and Ampco Pittsburgh positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if ESAB Corp position performs unexpectedly, Ampco Pittsburgh 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 Ampco Pittsburgh will offset losses from the drop in Ampco Pittsburgh's long position.| ESAB Corp vs. Northwest Pipe | ESAB Corp vs. Haynes International | ESAB Corp vs. Mayville Engineering Co | ESAB Corp vs. Ryerson Holding Corp |
| Ampco Pittsburgh vs. Northwest Pipe | Ampco Pittsburgh vs. Insteel Industries | Ampco Pittsburgh vs. Carpenter Technology | Ampco Pittsburgh vs. ESAB Corp |
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 Volatility Analysis module to get historical volatility and risk analysis based on latest market data.
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