Correlation Between Eaton PLC and Alfa Laval
Can any of the company-specific risk be diversified away by investing in both Eaton PLC and Alfa Laval 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 Eaton PLC and Alfa Laval into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Eaton PLC and Alfa Laval AB, you can compare the effects of market volatilities on Eaton PLC and Alfa Laval 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 Eaton PLC with a short position of Alfa Laval. Check out your portfolio center. Please also check ongoing floating volatility patterns of Eaton PLC and Alfa Laval.
Diversification Opportunities for Eaton PLC and Alfa Laval
0.83 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Eaton and Alfa is 0.83. Overlapping area represents the amount of risk that can be diversified away by holding Eaton PLC and Alfa Laval AB in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Alfa Laval AB and Eaton PLC 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 Eaton PLC are associated (or correlated) with Alfa Laval. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Alfa Laval AB has no effect on the direction of Eaton PLC i.e., Eaton PLC and Alfa Laval go up and down completely randomly.
Pair Corralation between Eaton PLC and Alfa Laval
If you would invest 34,454 in Eaton PLC on August 29, 2024 and sell it today you would earn a total of 2,744 from holding Eaton PLC or generate 7.96% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Eaton PLC vs. Alfa Laval AB
Performance |
| Timeline |
| Eaton PLC |
| Alfa Laval AB |
Eaton PLC and Alfa Laval Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Eaton PLC and Alfa Laval
The main advantage of trading using opposite Eaton PLC and Alfa Laval positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Eaton PLC position performs unexpectedly, Alfa Laval 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 Alfa Laval will offset losses from the drop in Alfa Laval's long position.| Eaton PLC vs. China Automotive Systems | Eaton PLC vs. China Natural Resources | Eaton PLC vs. Sonida Senior Living | Eaton PLC vs. UTStarcom Holdings Corp |
| Alfa Laval vs. Parker Hannifin | Alfa Laval vs. Eaton PLC | Alfa Laval vs. Dover | Alfa Laval vs. Illinois Tool Works |
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 Stock Tickers module to use high-impact, comprehensive, and customizable stock tickers that can be easily integrated to any websites.
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