Correlation Between NVent Electric and Enersys
Can any of the company-specific risk be diversified away by investing in both NVent Electric and Enersys 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 Enersys 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 Enersys, you can compare the effects of market volatilities on NVent Electric and Enersys 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 Enersys. Check out your portfolio center. Please also check ongoing floating volatility patterns of NVent Electric and Enersys.
Diversification Opportunities for NVent Electric and Enersys
0.16 | Correlation Coefficient |
Average diversification
The 3 months correlation between NVent and Enersys is 0.16. Overlapping area represents the amount of risk that can be diversified away by holding nVent Electric PLC and Enersys in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Enersys 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 Enersys. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Enersys has no effect on the direction of NVent Electric i.e., NVent Electric and Enersys go up and down completely randomly.
Pair Corralation between NVent Electric and Enersys
Considering the 90-day investment horizon nVent Electric PLC is expected to generate 1.72 times more return on investment than Enersys. However, NVent Electric is 1.72 times more volatile than Enersys. It trades about 0.08 of its potential returns per unit of risk. Enersys is currently generating about -0.07 per unit of risk. If you would invest 7,483 in nVent Electric PLC on August 27, 2024 and sell it today you would earn a total of 351.00 from holding nVent Electric PLC or generate 4.69% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
nVent Electric PLC vs. Enersys
Performance |
| Timeline |
| nVent Electric PLC |
| Enersys |
NVent Electric and Enersys Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with NVent Electric and Enersys
The main advantage of trading using opposite NVent Electric and Enersys positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if NVent Electric position performs unexpectedly, Enersys 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 Enersys will offset losses from the drop in Enersys' long position.| NVent Electric vs. Hubbell | NVent Electric vs. Advanced Energy Industries | NVent Electric vs. Vertiv Holdings Co | NVent Electric vs. Energizer Holdings |
| Enersys vs. Bloom Energy Corp | Enersys vs. Eos Energy Enterprises | Enersys vs. Sunrise New Energy | Enersys vs. Flux Power Holdings |
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 Crypto Correlations module to use cryptocurrency correlation module to diversify your cryptocurrency portfolio across multiple coins.
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