Correlation Between Enpro Industries and ITT
Can any of the company-specific risk be diversified away by investing in both Enpro Industries and ITT 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 Enpro Industries and ITT into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Enpro Industries and ITT Inc, you can compare the effects of market volatilities on Enpro Industries and ITT 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 Enpro Industries with a short position of ITT. Check out your portfolio center. Please also check ongoing floating volatility patterns of Enpro Industries and ITT.
Diversification Opportunities for Enpro Industries and ITT
0.71 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Enpro and ITT is 0.71. Overlapping area represents the amount of risk that can be diversified away by holding Enpro Industries and ITT Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ITT Inc and Enpro Industries 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 Enpro Industries are associated (or correlated) with ITT. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of ITT Inc has no effect on the direction of Enpro Industries i.e., Enpro Industries and ITT go up and down completely randomly.
Pair Corralation between Enpro Industries and ITT
Considering the 90-day investment horizon Enpro Industries is expected to generate 1.4 times more return on investment than ITT. However, Enpro Industries is 1.4 times more volatile than ITT Inc. It trades about 0.11 of its potential returns per unit of risk. ITT Inc is currently generating about 0.14 per unit of risk. If you would invest 15,969 in Enpro Industries on August 26, 2024 and sell it today you would earn a total of 2,453 from holding Enpro Industries or generate 15.36% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Enpro Industries vs. ITT Inc
Performance |
| Timeline |
| Enpro Industries |
| ITT Inc |
Enpro Industries and ITT Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Enpro Industries and ITT
The main advantage of trading using opposite Enpro Industries and ITT positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Enpro Industries position performs unexpectedly, ITT 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 ITT will offset losses from the drop in ITT's long position.| 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 Companies Directory module to evaluate performance of over 100,000 Stocks, Funds, and ETFs against different fundamentals.
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