Correlation Between NVent Electric and Energizer Holdings
Can any of the company-specific risk be diversified away by investing in both NVent Electric and Energizer Holdings 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 Energizer Holdings 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 Energizer Holdings, you can compare the effects of market volatilities on NVent Electric and Energizer Holdings 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 Energizer Holdings. Check out your portfolio center. Please also check ongoing floating volatility patterns of NVent Electric and Energizer Holdings.
Diversification Opportunities for NVent Electric and Energizer Holdings
0.43 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between NVent and Energizer is 0.43. Overlapping area represents the amount of risk that can be diversified away by holding nVent Electric PLC and Energizer Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Energizer Holdings 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 Energizer Holdings. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Energizer Holdings has no effect on the direction of NVent Electric i.e., NVent Electric and Energizer Holdings go up and down completely randomly.
Pair Corralation between NVent Electric and Energizer Holdings
Considering the 90-day investment horizon nVent Electric PLC is expected to under-perform the Energizer Holdings. In addition to that, NVent Electric is 2.89 times more volatile than Energizer Holdings. It trades about -0.04 of its total potential returns per unit of risk. Energizer Holdings is currently generating about -0.06 per unit of volatility. If you would invest 3,461 in Energizer Holdings on November 3, 2024 and sell it today you would lose (62.00) from holding Energizer Holdings or give up 1.79% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
nVent Electric PLC vs. Energizer Holdings
Performance |
| Timeline |
| nVent Electric PLC |
| Energizer Holdings |
NVent Electric and Energizer Holdings Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with NVent Electric and Energizer Holdings
The main advantage of trading using opposite NVent Electric and Energizer Holdings positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if NVent Electric position performs unexpectedly, Energizer Holdings 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 Energizer Holdings will offset losses from the drop in Energizer Holdings' long position.| NVent Electric vs. Hubbell | NVent Electric vs. Advanced Energy Industries | NVent Electric vs. Vertiv Holdings Co | NVent Electric vs. Energizer Holdings |
| Energizer Holdings vs. Acuity Brands | Energizer Holdings vs. Espey Mfg Electronics | Energizer Holdings vs. Preformed Line Products | Energizer Holdings vs. Kimball Electronics |
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 ETF Categories module to list of ETF categories grouped based on various criteria, such as the investment strategy or type of investments.
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