Correlation Between Eaton PLC and Spirax-Sarco Engineering
Can any of the company-specific risk be diversified away by investing in both Eaton PLC and Spirax-Sarco Engineering 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 Spirax-Sarco Engineering into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Eaton PLC and Spirax Sarco Engineering PLC, you can compare the effects of market volatilities on Eaton PLC and Spirax-Sarco Engineering 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 Spirax-Sarco Engineering. Check out your portfolio center. Please also check ongoing floating volatility patterns of Eaton PLC and Spirax-Sarco Engineering.
Diversification Opportunities for Eaton PLC and Spirax-Sarco Engineering
-0.79 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between Eaton and Spirax-Sarco is -0.79. Overlapping area represents the amount of risk that can be diversified away by holding Eaton PLC and Spirax Sarco Engineering PLC in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Spirax-Sarco Engineering 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 Spirax-Sarco Engineering. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Spirax-Sarco Engineering has no effect on the direction of Eaton PLC i.e., Eaton PLC and Spirax-Sarco Engineering go up and down completely randomly.
Pair Corralation between Eaton PLC and Spirax-Sarco Engineering
Considering the 90-day investment horizon Eaton PLC is expected to generate 0.84 times more return on investment than Spirax-Sarco Engineering. However, Eaton PLC is 1.2 times less risky than Spirax-Sarco Engineering. It trades about 0.11 of its potential returns per unit of risk. Spirax Sarco Engineering PLC is currently generating about -0.04 per unit of risk. If you would invest 15,558 in Eaton PLC on August 25, 2024 and sell it today you would earn a total of 22,183 from holding Eaton PLC or generate 142.58% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 97.18% |
| Values | Daily Returns |
Eaton PLC vs. Spirax Sarco Engineering PLC
Performance |
| Timeline |
| Eaton PLC |
| Spirax-Sarco Engineering |
Eaton PLC and Spirax-Sarco Engineering Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Eaton PLC and Spirax-Sarco Engineering
The main advantage of trading using opposite Eaton PLC and Spirax-Sarco Engineering positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Eaton PLC position performs unexpectedly, Spirax-Sarco Engineering 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 Spirax-Sarco Engineering will offset losses from the drop in Spirax-Sarco Engineering's long position.| Eaton PLC vs. Graco Inc | Eaton PLC vs. Franklin Electric Co | Eaton PLC vs. Flowserve | Eaton PLC vs. Donaldson |
| Spirax-Sarco Engineering vs. Aumann AG | Spirax-Sarco Engineering vs. Arista Power | Spirax-Sarco Engineering vs. Atlas Copco AB | Spirax-Sarco Engineering vs. American Commerce Solutions |
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 Fundamental Analysis module to view fundamental data based on most recent published financial statements.
Other Complementary Tools
| Cryptocurrency Center Build and monitor diversified portfolio of extremely risky digital assets and cryptocurrency | |
| Commodity Channel Use Commodity Channel Index to analyze current equity momentum | |
| Alpha Finder Use alpha and beta coefficients to find investment opportunities after accounting for the risk | |
| Premium Stories Follow Macroaxis premium stories from verified contributors across different equity types, categories and coverage scope | |
| Theme Ratings Determine theme ratings based on digital equity recommendations. Macroaxis theme ratings are based on combination of fundamental analysis and risk-adjusted market performance |