Correlation Between Eaton PLC and Xometry
Can any of the company-specific risk be diversified away by investing in both Eaton PLC and Xometry 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 Xometry into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Eaton PLC and Xometry, you can compare the effects of market volatilities on Eaton PLC and Xometry 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 Xometry. Check out your portfolio center. Please also check ongoing floating volatility patterns of Eaton PLC and Xometry.
Diversification Opportunities for Eaton PLC and Xometry
Poor diversification
The 3 months correlation between Eaton and Xometry is 0.71. Overlapping area represents the amount of risk that can be diversified away by holding Eaton PLC and Xometry in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Xometry 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 Xometry. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Xometry has no effect on the direction of Eaton PLC i.e., Eaton PLC and Xometry go up and down completely randomly.
Pair Corralation between Eaton PLC and Xometry
Considering the 90-day investment horizon Eaton PLC is expected to generate 5.21 times less return on investment than Xometry. But when comparing it to its historical volatility, Eaton PLC is 3.23 times less risky than Xometry. It trades about 0.23 of its potential returns per unit of risk. Xometry is currently generating about 0.37 of returns per unit of risk over similar time horizon. If you would invest 1,997 in Xometry on August 27, 2024 and sell it today you would earn a total of 1,143 from holding Xometry or generate 57.24% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Eaton PLC vs. Xometry
Performance |
| Timeline |
| Eaton PLC |
| Xometry |
Eaton PLC and Xometry Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Eaton PLC and Xometry
The main advantage of trading using opposite Eaton PLC and Xometry positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Eaton PLC position performs unexpectedly, Xometry 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 Xometry will offset losses from the drop in Xometry's long position.| Eaton PLC vs. Graco Inc | Eaton PLC vs. Franklin Electric Co | Eaton PLC vs. Flowserve | Eaton PLC vs. Donaldson |
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 Top Crypto Exchanges module to search and analyze digital assets across top global cryptocurrency exchanges.
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