Correlation Between RETAIL FOOD and EatonPLC
Can any of the company-specific risk be diversified away by investing in both RETAIL FOOD and EatonPLC 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 RETAIL FOOD and EatonPLC into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between RETAIL FOOD GROUP and Eaton PLC, you can compare the effects of market volatilities on RETAIL FOOD and EatonPLC 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 RETAIL FOOD with a short position of EatonPLC. Check out your portfolio center. Please also check ongoing floating volatility patterns of RETAIL FOOD and EatonPLC.
Diversification Opportunities for RETAIL FOOD and EatonPLC
0.59 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between RETAIL and EatonPLC is 0.59. Overlapping area represents the amount of risk that can be diversified away by holding RETAIL FOOD GROUP and Eaton PLC in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Eaton PLC and RETAIL FOOD 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 RETAIL FOOD GROUP are associated (or correlated) with EatonPLC. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Eaton PLC has no effect on the direction of RETAIL FOOD i.e., RETAIL FOOD and EatonPLC go up and down completely randomly.
Pair Corralation between RETAIL FOOD and EatonPLC
Assuming the 90 days trading horizon RETAIL FOOD GROUP is expected to under-perform the EatonPLC. In addition to that, RETAIL FOOD is 1.89 times more volatile than Eaton PLC. It trades about -0.12 of its total potential returns per unit of risk. Eaton PLC is currently generating about -0.09 per unit of volatility. If you would invest 35,130 in Eaton PLC on October 12, 2024 and sell it today you would lose (2,040) from holding Eaton PLC or give up 5.81% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 97.5% |
| Values | Daily Returns |
RETAIL FOOD GROUP vs. Eaton PLC
Performance |
| Timeline |
| RETAIL FOOD GROUP |
| Eaton PLC |
RETAIL FOOD and EatonPLC Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with RETAIL FOOD and EatonPLC
The main advantage of trading using opposite RETAIL FOOD and EatonPLC positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if RETAIL FOOD position performs unexpectedly, EatonPLC 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 EatonPLC will offset losses from the drop in EatonPLC's long position.| RETAIL FOOD vs. SILICON LABORATOR | RETAIL FOOD vs. Sun Life Financial | RETAIL FOOD vs. Synovus Financial Corp | RETAIL FOOD vs. JSC Halyk bank |
| EatonPLC vs. GOLD ROAD RES | EatonPLC vs. RETAIL FOOD GROUP | EatonPLC vs. TITANIUM TRANSPORTGROUP | EatonPLC vs. The Trade Desk |
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 Crypto Correlations module to use cryptocurrency correlation module to diversify your cryptocurrency portfolio across multiple coins.
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