Correlation Between Eaton PLC and Crane
Can any of the company-specific risk be diversified away by investing in both Eaton PLC and Crane 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 Crane into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Eaton PLC and Crane Company, you can compare the effects of market volatilities on Eaton PLC and Crane 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 Crane. Check out your portfolio center. Please also check ongoing floating volatility patterns of Eaton PLC and Crane.
Diversification Opportunities for Eaton PLC and Crane
Very weak diversification
The 3 months correlation between Eaton and Crane is 0.54. Overlapping area represents the amount of risk that can be diversified away by holding Eaton PLC and Crane Company in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Crane Company 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 Crane. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Crane Company has no effect on the direction of Eaton PLC i.e., Eaton PLC and Crane go up and down completely randomly.
Pair Corralation between Eaton PLC and Crane
Considering the 90-day investment horizon Eaton PLC is expected to under-perform the Crane. In addition to that, Eaton PLC is 1.21 times more volatile than Crane Company. It trades about -0.09 of its total potential returns per unit of risk. Crane Company is currently generating about 0.2 per unit of volatility. If you would invest 15,366 in Crane Company on November 9, 2024 and sell it today you would earn a total of 1,913 from holding Crane Company or generate 12.45% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Eaton PLC vs. Crane Company
Performance |
| Timeline |
| Eaton PLC |
| Crane Company |
Eaton PLC and Crane Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Eaton PLC and Crane
The main advantage of trading using opposite Eaton PLC and Crane positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Eaton PLC position performs unexpectedly, Crane 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 Crane will offset losses from the drop in Crane's long position.| Eaton PLC vs. Illinois Tool Works | Eaton PLC vs. Dover | Eaton PLC vs. Cummins | Eaton PLC vs. Parker Hannifin |
| Crane vs. Standex International | Crane vs. Donaldson | Crane vs. CSW Industrials | Crane vs. Franklin Electric Co |
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 Screener module to find equities using a custom stock filter or screen asymmetry in trading patterns, price, volume, or investment outlook..
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