Correlation Between Eaton PLC and Nuscale Power
Can any of the company-specific risk be diversified away by investing in both Eaton PLC and Nuscale Power 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 Nuscale Power into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Eaton PLC and Nuscale Power Corp, you can compare the effects of market volatilities on Eaton PLC and Nuscale Power 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 Nuscale Power. Check out your portfolio center. Please also check ongoing floating volatility patterns of Eaton PLC and Nuscale Power.
Diversification Opportunities for Eaton PLC and Nuscale Power
0.91 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between Eaton and Nuscale is 0.91. Overlapping area represents the amount of risk that can be diversified away by holding Eaton PLC and Nuscale Power Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Nuscale Power Corp 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 Nuscale Power. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Nuscale Power Corp has no effect on the direction of Eaton PLC i.e., Eaton PLC and Nuscale Power go up and down completely randomly.
Pair Corralation between Eaton PLC and Nuscale Power
Considering the 90-day investment horizon Eaton PLC is expected to generate 3.86 times less return on investment than Nuscale Power. But when comparing it to its historical volatility, Eaton PLC is 3.57 times less risky than Nuscale Power. It trades about 0.23 of its potential returns per unit of risk. Nuscale Power Corp is currently generating about 0.25 of returns per unit of risk over similar time horizon. If you would invest 2,200 in Nuscale Power Corp on August 27, 2024 and sell it today you would earn a total of 821.00 from holding Nuscale Power Corp or generate 37.32% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Eaton PLC vs. Nuscale Power Corp
Performance |
| Timeline |
| Eaton PLC |
| Nuscale Power Corp |
Eaton PLC and Nuscale Power Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Eaton PLC and Nuscale Power
The main advantage of trading using opposite Eaton PLC and Nuscale Power positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Eaton PLC position performs unexpectedly, Nuscale Power 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 Nuscale Power will offset losses from the drop in Nuscale Power's long position.| Eaton PLC vs. Graco Inc | Eaton PLC vs. Franklin Electric Co | Eaton PLC vs. Flowserve | Eaton PLC vs. Donaldson |
| Nuscale Power vs. Cummins | Nuscale Power vs. Chart Industries | Nuscale Power vs. GE Aerospace | Nuscale Power vs. Nel ASA |
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 Funds Screener module to find actively-traded funds from around the world traded on over 30 global exchanges.
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