Correlation Between Eaton PLC and Toshiba
Can any of the company-specific risk be diversified away by investing in both Eaton PLC and Toshiba 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 Toshiba into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Eaton PLC and Toshiba, you can compare the effects of market volatilities on Eaton PLC and Toshiba 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 Toshiba. Check out your portfolio center. Please also check ongoing floating volatility patterns of Eaton PLC and Toshiba.
Diversification Opportunities for Eaton PLC and Toshiba
Very good diversification
The 3 months correlation between Eaton and Toshiba is -0.34. Overlapping area represents the amount of risk that can be diversified away by holding Eaton PLC and Toshiba in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Toshiba 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 Toshiba. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Toshiba has no effect on the direction of Eaton PLC i.e., Eaton PLC and Toshiba go up and down completely randomly.
Pair Corralation between Eaton PLC and Toshiba
If you would invest 22,304 in Eaton PLC on August 25, 2024 and sell it today you would earn a total of 15,437 from holding Eaton PLC or generate 69.21% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 0.4% |
| Values | Daily Returns |
Eaton PLC vs. Toshiba
Performance |
| Timeline |
| Eaton PLC |
| Toshiba |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Very Weak
Eaton PLC and Toshiba Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Eaton PLC and Toshiba
The main advantage of trading using opposite Eaton PLC and Toshiba positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Eaton PLC position performs unexpectedly, Toshiba 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 Toshiba will offset losses from the drop in Toshiba's long position.| Eaton PLC vs. Graco Inc | Eaton PLC vs. Franklin Electric Co | Eaton PLC vs. Flowserve | Eaton PLC vs. Donaldson |
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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 Equity Valuation module to check real value of public entities based on technical and fundamental data.
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