Correlation Between Eaton PLC and Ametek
Can any of the company-specific risk be diversified away by investing in both Eaton PLC and Ametek 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 Ametek into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Eaton PLC and Ametek Inc, you can compare the effects of market volatilities on Eaton PLC and Ametek 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 Ametek. Check out your portfolio center. Please also check ongoing floating volatility patterns of Eaton PLC and Ametek.
Diversification Opportunities for Eaton PLC and Ametek
Poor diversification
The 3 months correlation between Eaton and Ametek is 0.73. Overlapping area represents the amount of risk that can be diversified away by holding Eaton PLC and Ametek Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Ametek Inc 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 Ametek. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Ametek Inc has no effect on the direction of Eaton PLC i.e., Eaton PLC and Ametek go up and down completely randomly.
Pair Corralation between Eaton PLC and Ametek
Considering the 90-day investment horizon Eaton PLC is expected to generate 1.27 times more return on investment than Ametek. However, Eaton PLC is 1.27 times more volatile than Ametek Inc. It trades about 0.13 of its potential returns per unit of risk. Ametek Inc is currently generating about 0.08 per unit of risk. If you would invest 22,185 in Eaton PLC on August 24, 2024 and sell it today you would earn a total of 14,910 from holding Eaton PLC or generate 67.21% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Eaton PLC vs. Ametek Inc
Performance |
| Timeline |
| Eaton PLC |
| Ametek Inc |
Eaton PLC and Ametek Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Eaton PLC and Ametek
The main advantage of trading using opposite Eaton PLC and Ametek positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Eaton PLC position performs unexpectedly, Ametek 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 Ametek will offset losses from the drop in Ametek's long position.| Eaton PLC vs. Small Cap Core | Eaton PLC vs. Freedom Holding Corp | Eaton PLC vs. Gfl Environmental Holdings | Eaton PLC vs. Growth Fund Of |
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 Idea Optimizer module to use advanced portfolio builder with pre-computed micro ideas to build optimal portfolio .
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