Correlation Between NVent Electric and Elong Power
Can any of the company-specific risk be diversified away by investing in both NVent Electric and Elong Power 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 NVent Electric and Elong Power into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between nVent Electric PLC and Elong Power Holding, you can compare the effects of market volatilities on NVent Electric and Elong Power 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 NVent Electric with a short position of Elong Power. Check out your portfolio center. Please also check ongoing floating volatility patterns of NVent Electric and Elong Power.
Diversification Opportunities for NVent Electric and Elong Power
-0.59 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between NVent and Elong is -0.59. Overlapping area represents the amount of risk that can be diversified away by holding nVent Electric PLC and Elong Power Holding in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Elong Power Holding and NVent Electric 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 nVent Electric PLC are associated (or correlated) with Elong Power. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Elong Power Holding has no effect on the direction of NVent Electric i.e., NVent Electric and Elong Power go up and down completely randomly.
Pair Corralation between NVent Electric and Elong Power
Considering the 90-day investment horizon nVent Electric PLC is expected to generate 0.45 times more return on investment than Elong Power. However, nVent Electric PLC is 2.21 times less risky than Elong Power. It trades about 0.09 of its potential returns per unit of risk. Elong Power Holding is currently generating about -0.08 per unit of risk. If you would invest 4,096 in nVent Electric PLC on August 31, 2024 and sell it today you would earn a total of 3,558 from holding nVent Electric PLC or generate 86.87% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
nVent Electric PLC vs. Elong Power Holding
Performance |
| Timeline |
| nVent Electric PLC |
| Elong Power Holding |
NVent Electric and Elong Power Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with NVent Electric and Elong Power
The main advantage of trading using opposite NVent Electric and Elong Power positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if NVent Electric position performs unexpectedly, Elong Power 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 Elong Power will offset losses from the drop in Elong Power's long position.| NVent Electric vs. Hubbell | NVent Electric vs. Advanced Energy Industries | NVent Electric vs. Vertiv Holdings Co | NVent Electric vs. Energizer Holdings |
| Elong Power vs. Bloom Energy Corp | Elong Power vs. Electrovaya Common Shares | Elong Power vs. Enovix Corp | Elong Power vs. Eos Energy Enterprises |
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 Instant Ratings module to determine any equity ratings based on digital recommendations. Macroaxis instant equity ratings are based on combination of fundamental analysis and risk-adjusted market performance.
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