Correlation Between Hubbell and NVent Electric
Can any of the company-specific risk be diversified away by investing in both Hubbell and NVent 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 Hubbell and NVent Electric into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Hubbell and nVent Electric PLC, you can compare the effects of market volatilities on Hubbell and NVent 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 Hubbell with a short position of NVent Electric. Check out your portfolio center. Please also check ongoing floating volatility patterns of Hubbell and NVent Electric.
Diversification Opportunities for Hubbell and NVent Electric
0.94 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between Hubbell and NVent is 0.94. Overlapping area represents the amount of risk that can be diversified away by holding Hubbell and nVent Electric PLC in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on nVent Electric PLC and Hubbell 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 Hubbell are associated (or correlated) with NVent Electric. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of nVent Electric PLC has no effect on the direction of Hubbell i.e., Hubbell and NVent Electric go up and down completely randomly.
Pair Corralation between Hubbell and NVent Electric
Given the investment horizon of 90 days Hubbell is expected to generate 1.58 times less return on investment than NVent Electric. But when comparing it to its historical volatility, Hubbell is 1.47 times less risky than NVent Electric. It trades about 0.07 of its potential returns per unit of risk. nVent Electric PLC is currently generating about 0.08 of returns per unit of risk over similar time horizon. If you would invest 7,483 in nVent Electric PLC on August 28, 2024 and sell it today you would earn a total of 351.00 from holding nVent Electric PLC or generate 4.69% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Hubbell vs. nVent Electric PLC
Performance |
| Timeline |
| Hubbell |
| nVent Electric PLC |
Hubbell and NVent Electric Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Hubbell and NVent Electric
The main advantage of trading using opposite Hubbell and NVent Electric positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Hubbell position performs unexpectedly, NVent 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 NVent Electric will offset losses from the drop in NVent Electric's long position.| Hubbell vs. Advanced Energy Industries | Hubbell vs. Enersys | Hubbell vs. Acuity Brands | Hubbell vs. Kimball Electronics |
| NVent Electric vs. Hubbell | NVent Electric vs. Advanced Energy Industries | NVent Electric vs. Vertiv Holdings Co | NVent Electric vs. Energizer Holdings |
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 Suggestion module to get suggestions outside of your existing asset allocation including your own model portfolios.
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