Correlation Between Eaton PLC and Amaero International
Can any of the company-specific risk be diversified away by investing in both Eaton PLC and Amaero International 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 Amaero International into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Eaton PLC and Amaero International, you can compare the effects of market volatilities on Eaton PLC and Amaero International 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 Amaero International. Check out your portfolio center. Please also check ongoing floating volatility patterns of Eaton PLC and Amaero International.
Diversification Opportunities for Eaton PLC and Amaero International
0.19 | Correlation Coefficient |
Average diversification
The 3 months correlation between Eaton and Amaero is 0.19. Overlapping area represents the amount of risk that can be diversified away by holding Eaton PLC and Amaero International in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Amaero International 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 Amaero International. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Amaero International has no effect on the direction of Eaton PLC i.e., Eaton PLC and Amaero International go up and down completely randomly.
Pair Corralation between Eaton PLC and Amaero International
Considering the 90-day investment horizon Eaton PLC is expected to under-perform the Amaero International. In addition to that, Eaton PLC is 1.52 times more volatile than Amaero International. It trades about -0.02 of its total potential returns per unit of risk. Amaero International is currently generating about 0.46 per unit of volatility. If you would invest 19.00 in Amaero International on November 2, 2024 and sell it today you would earn a total of 5.00 from holding Amaero International or generate 26.32% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Eaton PLC vs. Amaero International
Performance |
| Timeline |
| Eaton PLC |
| Amaero International |
Eaton PLC and Amaero International Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Eaton PLC and Amaero International
The main advantage of trading using opposite Eaton PLC and Amaero International positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Eaton PLC position performs unexpectedly, Amaero International 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 Amaero International will offset losses from the drop in Amaero International's long position.| Eaton PLC vs. Illinois Tool Works | Eaton PLC vs. Dover | Eaton PLC vs. Cummins | Eaton PLC vs. Parker Hannifin |
| Amaero International vs. Atlas Copco AB | Amaero International vs. Arista Power | Amaero International vs. Alfa Laval AB | Amaero International vs. American Commerce Solutions |
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 Equity Search module to search for actively traded equities including funds and ETFs from over 30 global markets.
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