Correlation Between Eaton PLC and Crawford United
Can any of the company-specific risk be diversified away by investing in both Eaton PLC and Crawford United 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 Crawford United into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Eaton PLC and Crawford United, you can compare the effects of market volatilities on Eaton PLC and Crawford United 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 Crawford United. Check out your portfolio center. Please also check ongoing floating volatility patterns of Eaton PLC and Crawford United.
Diversification Opportunities for Eaton PLC and Crawford United
0.89 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Eaton and Crawford is 0.89. Overlapping area represents the amount of risk that can be diversified away by holding Eaton PLC and Crawford United in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Crawford United 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 Crawford United. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Crawford United has no effect on the direction of Eaton PLC i.e., Eaton PLC and Crawford United go up and down completely randomly.
Pair Corralation between Eaton PLC and Crawford United
If you would invest 33,051 in Eaton PLC on August 29, 2024 and sell it today you would earn a total of 4,678 from holding Eaton PLC or generate 14.15% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 2.33% |
| Values | Daily Returns |
Eaton PLC vs. Crawford United
Performance |
| Timeline |
| Eaton PLC |
| Crawford United |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Very Weak
Eaton PLC and Crawford United Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Eaton PLC and Crawford United
The main advantage of trading using opposite Eaton PLC and Crawford United positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Eaton PLC position performs unexpectedly, Crawford United 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 Crawford United will offset losses from the drop in Crawford United's long position.| Eaton PLC vs. China Automotive Systems | Eaton PLC vs. China Natural Resources | Eaton PLC vs. Sonida Senior Living | Eaton PLC vs. UTStarcom Holdings Corp |
| Crawford United vs. New Ulm Telecom | Crawford United vs. Ieh Corp | Crawford United vs. FitLife Brands, Common | Crawford United vs. Butler National Corp |
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 Analyzer module to analyze all characteristics, volatility and risk-adjusted return of Macroaxis ideas.
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