Correlation Between Marvell Technology and Eaton Plc
Can any of the company-specific risk be diversified away by investing in both Marvell Technology and Eaton Plc 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 Marvell Technology and Eaton Plc into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Marvell Technology and Eaton plc, you can compare the effects of market volatilities on Marvell Technology and Eaton Plc 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 Marvell Technology with a short position of Eaton Plc. Check out your portfolio center. Please also check ongoing floating volatility patterns of Marvell Technology and Eaton Plc.
Diversification Opportunities for Marvell Technology and Eaton Plc
0.93 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between Marvell and Eaton is 0.93. Overlapping area represents the amount of risk that can be diversified away by holding Marvell Technology and Eaton plc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Eaton plc and Marvell Technology 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 Marvell Technology are associated (or correlated) with Eaton Plc. 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 Marvell Technology i.e., Marvell Technology and Eaton Plc go up and down completely randomly.
Pair Corralation between Marvell Technology and Eaton Plc
Assuming the 90 days trading horizon Marvell Technology is expected to generate 1.34 times more return on investment than Eaton Plc. However, Marvell Technology is 1.34 times more volatile than Eaton plc. It trades about 0.18 of its potential returns per unit of risk. Eaton plc is currently generating about 0.23 per unit of risk. If you would invest 4,190 in Marvell Technology on September 3, 2024 and sell it today you would earn a total of 1,315 from holding Marvell Technology or generate 31.38% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 98.41% |
| Values | Daily Returns |
Marvell Technology vs. Eaton plc
Performance |
| Timeline |
| Marvell Technology |
| Eaton plc |
Marvell Technology and Eaton Plc Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Marvell Technology and Eaton Plc
The main advantage of trading using opposite Marvell Technology and Eaton Plc positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Marvell Technology position performs unexpectedly, Eaton Plc 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 Eaton Plc will offset losses from the drop in Eaton Plc's long position.| Marvell Technology vs. Taiwan Semiconductor Manufacturing | Marvell Technology vs. Apple Inc | Marvell Technology vs. Alibaba Group Holding | Marvell Technology vs. Microsoft |
| Eaton Plc vs. Align Technology | Eaton Plc vs. Lupatech SA | Eaton Plc vs. Micron Technology | Eaton Plc vs. Marvell Technology |
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 Aroon Oscillator module to analyze current equity momentum using Aroon Oscillator and other momentum ratios.
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