Correlation Between ESCO Technologies and Fortive Corp
Can any of the company-specific risk be diversified away by investing in both ESCO Technologies and Fortive 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 ESCO Technologies and Fortive Corp into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between ESCO Technologies and Fortive Corp, you can compare the effects of market volatilities on ESCO Technologies and Fortive 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 ESCO Technologies with a short position of Fortive Corp. Check out your portfolio center. Please also check ongoing floating volatility patterns of ESCO Technologies and Fortive Corp.
Diversification Opportunities for ESCO Technologies and Fortive Corp
0.29 | Correlation Coefficient |
Modest diversification
The 3 months correlation between ESCO and Fortive is 0.29. Overlapping area represents the amount of risk that can be diversified away by holding ESCO Technologies and Fortive Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Fortive Corp and ESCO Technologies 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 ESCO Technologies are associated (or correlated) with Fortive Corp. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Fortive Corp has no effect on the direction of ESCO Technologies i.e., ESCO Technologies and Fortive Corp go up and down completely randomly.
Pair Corralation between ESCO Technologies and Fortive Corp
Considering the 90-day investment horizon ESCO Technologies is expected to generate 1.17 times more return on investment than Fortive Corp. However, ESCO Technologies is 1.17 times more volatile than Fortive Corp. It trades about 0.15 of its potential returns per unit of risk. Fortive Corp is currently generating about 0.03 per unit of risk. If you would invest 10,801 in ESCO Technologies on August 24, 2024 and sell it today you would earn a total of 4,051 from holding ESCO Technologies or generate 37.51% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
ESCO Technologies vs. Fortive Corp
Performance |
| Timeline |
| ESCO Technologies |
| Fortive Corp |
ESCO Technologies and Fortive Corp Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with ESCO Technologies and Fortive Corp
The main advantage of trading using opposite ESCO Technologies and Fortive Corp positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if ESCO Technologies position performs unexpectedly, Fortive 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 Fortive Corp will offset losses from the drop in Fortive Corp's long position.| ESCO Technologies vs. Novanta | ESCO Technologies vs. Sono Tek Corp | ESCO Technologies vs. Itron Inc | ESCO Technologies vs. Badger Meter |
| Fortive Corp vs. Vishay Precision Group | Fortive Corp vs. Sensata Technologies Holding | Fortive Corp vs. Badger Meter | Fortive Corp vs. Trimble |
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 Equity Search module to search for actively traded equities including funds and ETFs from over 30 global markets.
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