Correlation Between ESCO Technologies and Trimble
Can any of the company-specific risk be diversified away by investing in both ESCO Technologies and Trimble 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 Trimble into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between ESCO Technologies and Trimble, you can compare the effects of market volatilities on ESCO Technologies and Trimble 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 Trimble. Check out your portfolio center. Please also check ongoing floating volatility patterns of ESCO Technologies and Trimble.
Diversification Opportunities for ESCO Technologies and Trimble
0.96 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between ESCO and Trimble is 0.96. Overlapping area represents the amount of risk that can be diversified away by holding ESCO Technologies and Trimble in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Trimble 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 Trimble. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Trimble has no effect on the direction of ESCO Technologies i.e., ESCO Technologies and Trimble go up and down completely randomly.
Pair Corralation between ESCO Technologies and Trimble
Considering the 90-day investment horizon ESCO Technologies is expected to generate 1.19 times less return on investment than Trimble. But when comparing it to its historical volatility, ESCO Technologies is 1.65 times less risky than Trimble. It trades about 0.31 of its potential returns per unit of risk. Trimble is currently generating about 0.22 of returns per unit of risk over similar time horizon. If you would invest 6,135 in Trimble on August 28, 2024 and sell it today you would earn a total of 1,160 from holding Trimble or generate 18.91% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
ESCO Technologies vs. Trimble
Performance |
| Timeline |
| ESCO Technologies |
| Trimble |
ESCO Technologies and Trimble Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with ESCO Technologies and Trimble
The main advantage of trading using opposite ESCO Technologies and Trimble positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if ESCO Technologies position performs unexpectedly, Trimble 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 Trimble will offset losses from the drop in Trimble's long position.| ESCO Technologies vs. Novanta | ESCO Technologies vs. Sono Tek Corp | ESCO Technologies vs. Itron Inc | ESCO Technologies vs. Badger Meter |
| Trimble vs. Fortive Corp | Trimble vs. MKS Instruments | Trimble vs. Novanta | Trimble vs. Vishay Precision 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 Companies Directory module to evaluate performance of over 100,000 Stocks, Funds, and ETFs against different fundamentals.
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