Correlation Between Graco and Enerpac Tool
Can any of the company-specific risk be diversified away by investing in both Graco and Enerpac Tool 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 Graco and Enerpac Tool into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Graco Inc and Enerpac Tool Group, you can compare the effects of market volatilities on Graco and Enerpac Tool 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 Graco with a short position of Enerpac Tool. Check out your portfolio center. Please also check ongoing floating volatility patterns of Graco and Enerpac Tool.
Diversification Opportunities for Graco and Enerpac Tool
0.8 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Graco and Enerpac is 0.8. Overlapping area represents the amount of risk that can be diversified away by holding Graco Inc and Enerpac Tool Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Enerpac Tool Group and Graco 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 Graco Inc are associated (or correlated) with Enerpac Tool. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Enerpac Tool Group has no effect on the direction of Graco i.e., Graco and Enerpac Tool go up and down completely randomly.
Pair Corralation between Graco and Enerpac Tool
Considering the 90-day investment horizon Graco is expected to generate 5.33 times less return on investment than Enerpac Tool. But when comparing it to its historical volatility, Graco Inc is 1.03 times less risky than Enerpac Tool. It trades about 0.07 of its potential returns per unit of risk. Enerpac Tool Group is currently generating about 0.38 of returns per unit of risk over similar time horizon. If you would invest 4,109 in Enerpac Tool Group on November 5, 2024 and sell it today you would earn a total of 410.00 from holding Enerpac Tool Group or generate 9.98% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Graco Inc vs. Enerpac Tool Group
Performance |
| Timeline |
| Graco Inc |
| Enerpac Tool Group |
Graco and Enerpac Tool Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Graco and Enerpac Tool
The main advantage of trading using opposite Graco and Enerpac Tool positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Graco position performs unexpectedly, Enerpac Tool 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 Enerpac Tool will offset losses from the drop in Enerpac Tool's long position.The idea behind Graco Inc and Enerpac Tool Group pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.| Enerpac Tool vs. Omega Flex | Enerpac Tool vs. Luxfer Holdings PLC | Enerpac Tool vs. Gorman Rupp | Enerpac Tool vs. CSW Industrials |
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 Positions Ratings module to determine portfolio positions ratings based on digital equity recommendations. Macroaxis instant position ratings are based on combination of fundamental analysis and risk-adjusted market performance.
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