Correlation Between Eaton PLC and Weir
Can any of the company-specific risk be diversified away by investing in both Eaton PLC and Weir 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 Weir into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Eaton PLC and The Weir Group, you can compare the effects of market volatilities on Eaton PLC and Weir 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 Weir. Check out your portfolio center. Please also check ongoing floating volatility patterns of Eaton PLC and Weir.
Diversification Opportunities for Eaton PLC and Weir
Very good diversification
The 3 months correlation between Eaton and Weir is -0.34. Overlapping area represents the amount of risk that can be diversified away by holding Eaton PLC and The Weir Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Weir Group 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 Weir. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Weir Group has no effect on the direction of Eaton PLC i.e., Eaton PLC and Weir go up and down completely randomly.
Pair Corralation between Eaton PLC and Weir
Considering the 90-day investment horizon Eaton PLC is expected to under-perform the Weir. In addition to that, Eaton PLC is 5.07 times more volatile than The Weir Group. It trades about -0.02 of its total potential returns per unit of risk. The Weir Group is currently generating about 0.5 per unit of volatility. If you would invest 2,735 in The Weir Group on November 2, 2024 and sell it today you would earn a total of 223.00 from holding The Weir Group or generate 8.15% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Eaton PLC vs. The Weir Group
Performance |
| Timeline |
| Eaton PLC |
| Weir Group |
Eaton PLC and Weir Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Eaton PLC and Weir
The main advantage of trading using opposite Eaton PLC and Weir positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Eaton PLC position performs unexpectedly, Weir 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 Weir will offset losses from the drop in Weir's long position.| Eaton PLC vs. Illinois Tool Works | Eaton PLC vs. Dover | Eaton PLC vs. Cummins | Eaton PLC vs. Parker Hannifin |
| Weir vs. Shanghai Electric Group | Weir vs. Xinjiang Goldwind Science | Weir vs. American Superconductor | Weir vs. Cummins |
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 Portfolio Manager module to state of the art Portfolio Manager to monitor and improve performance of your invested capital.
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