Correlation Between Eaton PLC and Yokogawa Electric
Can any of the company-specific risk be diversified away by investing in both Eaton PLC and Yokogawa Electric 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 Yokogawa Electric into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Eaton PLC and Yokogawa Electric, you can compare the effects of market volatilities on Eaton PLC and Yokogawa Electric 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 Yokogawa Electric. Check out your portfolio center. Please also check ongoing floating volatility patterns of Eaton PLC and Yokogawa Electric.
Diversification Opportunities for Eaton PLC and Yokogawa Electric
0.77 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Eaton and Yokogawa is 0.77. Overlapping area represents the amount of risk that can be diversified away by holding Eaton PLC and Yokogawa Electric in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Yokogawa Electric 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 Yokogawa Electric. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Yokogawa Electric has no effect on the direction of Eaton PLC i.e., Eaton PLC and Yokogawa Electric go up and down completely randomly.
Pair Corralation between Eaton PLC and Yokogawa Electric
Considering the 90-day investment horizon Eaton PLC is expected to generate 1.69 times more return on investment than Yokogawa Electric. However, Eaton PLC is 1.69 times more volatile than Yokogawa Electric. It trades about 0.13 of its potential returns per unit of risk. Yokogawa Electric is currently generating about 0.13 per unit of risk. If you would invest 16,422 in Eaton PLC on August 26, 2024 and sell it today you would earn a total of 21,319 from holding Eaton PLC or generate 129.82% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 14.21% |
| Values | Daily Returns |
Eaton PLC vs. Yokogawa Electric
Performance |
| Timeline |
| Eaton PLC |
| Yokogawa Electric |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Very Weak
Eaton PLC and Yokogawa Electric Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Eaton PLC and Yokogawa Electric
The main advantage of trading using opposite Eaton PLC and Yokogawa Electric positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Eaton PLC position performs unexpectedly, Yokogawa Electric 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 Yokogawa Electric will offset losses from the drop in Yokogawa Electric's long position.| Eaton PLC vs. Graco Inc | Eaton PLC vs. Franklin Electric Co | Eaton PLC vs. Flowserve | Eaton PLC vs. Donaldson |
| Yokogawa Electric vs. Daifuku Co | Yokogawa Electric vs. Eaton PLC | Yokogawa Electric vs. Yokogawa Electric Corp | Yokogawa Electric vs. Nidec |
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 Fundamentals Comparison module to compare fundamentals across multiple equities to find investing opportunities.
Other Complementary Tools
| Equity Forecasting Use basic forecasting models to generate price predictions and determine price momentum | |
| Global Markets Map Get a quick overview of global market snapshot using zoomable world map. Drill down to check world indexes | |
| Aroon Oscillator Analyze current equity momentum using Aroon Oscillator and other momentum ratios | |
| Economic Indicators Top statistical indicators that provide insights into how an economy is performing | |
| Portfolio Analyzer Portfolio analysis module that provides access to portfolio diagnostics and optimization engine |