Correlation Between Eaton PLC and Capstone Green
Can any of the company-specific risk be diversified away by investing in both Eaton PLC and Capstone Green 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 Capstone Green into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Eaton PLC and Capstone Green Energy, you can compare the effects of market volatilities on Eaton PLC and Capstone Green 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 Capstone Green. Check out your portfolio center. Please also check ongoing floating volatility patterns of Eaton PLC and Capstone Green.
Diversification Opportunities for Eaton PLC and Capstone Green
-0.5 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Eaton and Capstone is -0.5. Overlapping area represents the amount of risk that can be diversified away by holding Eaton PLC and Capstone Green Energy in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Capstone Green Energy 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 Capstone Green. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Capstone Green Energy has no effect on the direction of Eaton PLC i.e., Eaton PLC and Capstone Green go up and down completely randomly.
Pair Corralation between Eaton PLC and Capstone Green
If you would invest 34,185 in Eaton PLC on August 31, 2024 and sell it today you would earn a total of 3,013 from holding Eaton PLC or generate 8.81% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 4.55% |
| Values | Daily Returns |
Eaton PLC vs. Capstone Green Energy
Performance |
| Timeline |
| Eaton PLC |
| Capstone Green Energy |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Very Weak
Eaton PLC and Capstone Green Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Eaton PLC and Capstone Green
The main advantage of trading using opposite Eaton PLC and Capstone Green positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Eaton PLC position performs unexpectedly, Capstone Green 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 Capstone Green will offset losses from the drop in Capstone Green's long position.| Eaton PLC vs. Illinois Tool Works | Eaton PLC vs. Dover | Eaton PLC vs. Cummins | Eaton PLC vs. Parker Hannifin |
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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 Pair Correlation module to compare performance and examine fundamental relationship between any two equity instruments.
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