Correlation Between Enpro Industries and Twin Disc
Can any of the company-specific risk be diversified away by investing in both Enpro Industries and Twin Disc 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 Twin Disc into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Enpro Industries and Twin Disc Incorporated, you can compare the effects of market volatilities on Enpro Industries and Twin Disc 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 Twin Disc. Check out your portfolio center. Please also check ongoing floating volatility patterns of Enpro Industries and Twin Disc.
Diversification Opportunities for Enpro Industries and Twin Disc
0.02 | Correlation Coefficient |
Significant diversification
The 3 months correlation between Enpro and Twin is 0.02. Overlapping area represents the amount of risk that can be diversified away by holding Enpro Industries and Twin Disc Incorporated in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Twin Disc 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 Twin Disc. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Twin Disc has no effect on the direction of Enpro Industries i.e., Enpro Industries and Twin Disc go up and down completely randomly.
Pair Corralation between Enpro Industries and Twin Disc
Considering the 90-day investment horizon Enpro Industries is expected to generate 1.35 times more return on investment than Twin Disc. However, Enpro Industries is 1.35 times more volatile than Twin Disc Incorporated. It trades about 0.37 of its potential returns per unit of risk. Twin Disc Incorporated is currently generating about 0.0 per unit of risk. If you would invest 14,886 in Enpro Industries on August 26, 2024 and sell it today you would earn a total of 3,536 from holding Enpro Industries or generate 23.75% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Enpro Industries vs. Twin Disc Incorporated
Performance |
| Timeline |
| Enpro Industries |
| Twin Disc |
Enpro Industries and Twin Disc Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Enpro Industries and Twin Disc
The main advantage of trading using opposite Enpro Industries and Twin Disc positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Enpro Industries position performs unexpectedly, Twin Disc 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 Twin Disc will offset losses from the drop in Twin Disc's long position.| Enpro Industries vs. Helios Technologies | Enpro Industries vs. Omega Flex | Enpro Industries vs. Luxfer Holdings PLC | Enpro Industries vs. Hurco Companies |
| Twin Disc vs. Standex International | Twin Disc vs. Intevac | Twin Disc vs. Thermon Group Holdings | Twin Disc vs. Enpro Industries |
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 Price Ceiling Movement module to calculate and plot Price Ceiling Movement for different equity instruments.
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