Correlation Between Espey Mfg and Tritium Dcfc
Can any of the company-specific risk be diversified away by investing in both Espey Mfg and Tritium Dcfc 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 Espey Mfg and Tritium Dcfc into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Espey Mfg Electronics and Tritium Dcfc, you can compare the effects of market volatilities on Espey Mfg and Tritium Dcfc 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 Espey Mfg with a short position of Tritium Dcfc. Check out your portfolio center. Please also check ongoing floating volatility patterns of Espey Mfg and Tritium Dcfc.
Diversification Opportunities for Espey Mfg and Tritium Dcfc
0.65 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Espey and Tritium is 0.65. Overlapping area represents the amount of risk that can be diversified away by holding Espey Mfg Electronics and Tritium Dcfc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Tritium Dcfc and Espey Mfg 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 Espey Mfg Electronics are associated (or correlated) with Tritium Dcfc. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Tritium Dcfc has no effect on the direction of Espey Mfg i.e., Espey Mfg and Tritium Dcfc go up and down completely randomly.
Pair Corralation between Espey Mfg and Tritium Dcfc
Considering the 90-day investment horizon Espey Mfg is expected to generate 31.52 times less return on investment than Tritium Dcfc. But when comparing it to its historical volatility, Espey Mfg Electronics is 30.0 times less risky than Tritium Dcfc. It trades about 0.08 of its potential returns per unit of risk. Tritium Dcfc is currently generating about 0.08 of returns per unit of risk over similar time horizon. If you would invest 3,180 in Tritium Dcfc on November 9, 2024 and sell it today you would lose (2,816) from holding Tritium Dcfc or give up 88.55% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Espey Mfg Electronics vs. Tritium Dcfc
Performance |
| Timeline |
| Espey Mfg Electronics |
| Tritium Dcfc |
Espey Mfg and Tritium Dcfc Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Espey Mfg and Tritium Dcfc
The main advantage of trading using opposite Espey Mfg and Tritium Dcfc positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Espey Mfg position performs unexpectedly, Tritium Dcfc 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 Tritium Dcfc will offset losses from the drop in Tritium Dcfc's long position.| Espey Mfg vs. Chicago Rivet Machine | Espey Mfg vs. Eastern Co | Espey Mfg vs. Servotronics | Espey Mfg vs. Evans Bancorp |
| Tritium Dcfc vs. Microvast Holdings | Tritium Dcfc vs. FREYR Battery SA | Tritium Dcfc vs. Bloom Energy Corp | Tritium Dcfc vs. Enovix 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 Portfolio Rebalancing module to analyze risk-adjusted returns against different time horizons to find asset-allocation targets.
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