Correlation Between Graco and Enpro Industries
Can any of the company-specific risk be diversified away by investing in both Graco and Enpro Industries 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 Enpro Industries into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Graco Inc and Enpro Industries, you can compare the effects of market volatilities on Graco and Enpro Industries 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 Enpro Industries. Check out your portfolio center. Please also check ongoing floating volatility patterns of Graco and Enpro Industries.
Diversification Opportunities for Graco and Enpro Industries
0.8 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Graco and Enpro is 0.8. Overlapping area represents the amount of risk that can be diversified away by holding Graco Inc and Enpro Industries in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Enpro Industries 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 Enpro Industries. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Enpro Industries has no effect on the direction of Graco i.e., Graco and Enpro Industries go up and down completely randomly.
Pair Corralation between Graco and Enpro Industries
Considering the 90-day investment horizon Graco Inc is expected to generate 0.54 times more return on investment than Enpro Industries. However, Graco Inc is 1.84 times less risky than Enpro Industries. It trades about -0.1 of its potential returns per unit of risk. Enpro Industries is currently generating about -0.08 per unit of risk. If you would invest 8,375 in Graco Inc on January 11, 2025 and sell it today you would lose (475.00) from holding Graco Inc or give up 5.67% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Graco Inc vs. Enpro Industries
Performance |
| Timeline |
| Graco Inc |
| Enpro Industries |
Graco and Enpro Industries Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Graco and Enpro Industries
The main advantage of trading using opposite Graco and Enpro Industries positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Graco position performs unexpectedly, Enpro Industries 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 Enpro Industries will offset losses from the drop in Enpro Industries' long position.The idea behind Graco Inc and Enpro Industries 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.| Enpro Industries vs. Helios Technologies | Enpro Industries vs. Omega Flex | Enpro Industries vs. Luxfer Holdings PLC | Enpro Industries vs. Hurco Companies |
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 Piotroski F Score module to get Piotroski F Score based on the binary analysis strategy of nine different fundamentals.
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