Correlation Between Espey Mfg and NVent Electric
Can any of the company-specific risk be diversified away by investing in both Espey Mfg and NVent Electric 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 NVent Electric 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 nVent Electric PLC, you can compare the effects of market volatilities on Espey Mfg and NVent Electric 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 NVent Electric. Check out your portfolio center. Please also check ongoing floating volatility patterns of Espey Mfg and NVent Electric.
Diversification Opportunities for Espey Mfg and NVent Electric
0.25 | Correlation Coefficient |
Modest diversification
The 3 months correlation between Espey and NVent is 0.25. Overlapping area represents the amount of risk that can be diversified away by holding Espey Mfg Electronics and nVent Electric PLC in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on nVent Electric PLC 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 NVent Electric. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of nVent Electric PLC has no effect on the direction of Espey Mfg i.e., Espey Mfg and NVent Electric go up and down completely randomly.
Pair Corralation between Espey Mfg and NVent Electric
Considering the 90-day investment horizon Espey Mfg Electronics is expected to generate 0.46 times more return on investment than NVent Electric. However, Espey Mfg Electronics is 2.16 times less risky than NVent Electric. It trades about -0.08 of its potential returns per unit of risk. nVent Electric PLC is currently generating about -0.04 per unit of risk. If you would invest 2,937 in Espey Mfg Electronics on November 3, 2024 and sell it today you would lose (90.00) from holding Espey Mfg Electronics or give up 3.06% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Espey Mfg Electronics vs. nVent Electric PLC
Performance |
| Timeline |
| Espey Mfg Electronics |
| nVent Electric PLC |
Espey Mfg and NVent Electric Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Espey Mfg and NVent Electric
The main advantage of trading using opposite Espey Mfg and NVent Electric positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Espey Mfg position performs unexpectedly, NVent Electric 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 NVent Electric will offset losses from the drop in NVent Electric's long position.| Espey Mfg vs. Chicago Rivet Machine | Espey Mfg vs. Eastern Co | Espey Mfg vs. Servotronics | Espey Mfg vs. Evans Bancorp |
| NVent Electric vs. Hubbell | NVent Electric vs. Advanced Energy Industries | NVent Electric vs. Vertiv Holdings Co | NVent Electric vs. Energizer Holdings |
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 Holdings module to check your current holdings and cash postion to detemine if your portfolio needs rebalancing.
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