Correlation Between Eaton PLC and ATS
Can any of the company-specific risk be diversified away by investing in both Eaton PLC and ATS 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 ATS into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Eaton PLC and ATS Corporation, you can compare the effects of market volatilities on Eaton PLC and ATS 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 ATS. Check out your portfolio center. Please also check ongoing floating volatility patterns of Eaton PLC and ATS.
Diversification Opportunities for Eaton PLC and ATS
Poor diversification
The 3 months correlation between Eaton and ATS is 0.74. Overlapping area represents the amount of risk that can be diversified away by holding Eaton PLC and ATS Corp. in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ATS Corporation 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 ATS. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of ATS Corporation has no effect on the direction of Eaton PLC i.e., Eaton PLC and ATS go up and down completely randomly.
Pair Corralation between Eaton PLC and ATS
Considering the 90-day investment horizon Eaton PLC is expected to generate 0.83 times more return on investment than ATS. However, Eaton PLC is 1.2 times less risky than ATS. It trades about 0.11 of its potential returns per unit of risk. ATS Corporation is currently generating about 0.0 per unit of risk. If you would invest 15,310 in Eaton PLC on August 27, 2024 and sell it today you would earn a total of 22,431 from holding Eaton PLC or generate 146.51% 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. ATS Corp.
Performance |
| Timeline |
| Eaton PLC |
| ATS Corporation |
Eaton PLC and ATS Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Eaton PLC and ATS
The main advantage of trading using opposite Eaton PLC and ATS positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Eaton PLC position performs unexpectedly, ATS 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 ATS will offset losses from the drop in ATS's long position.| Eaton PLC vs. Graco Inc | Eaton PLC vs. Franklin Electric Co | Eaton PLC vs. Flowserve | Eaton PLC vs. Donaldson |
| ATS vs. Aquagold International | ATS vs. Morningstar Unconstrained Allocation | ATS vs. High Yield Municipal Fund | ATS vs. Thrivent High Yield |
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 Competition Analyzer module to analyze and compare many basic indicators for a group of related or unrelated entities.
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