Correlation Between NVent Electric and Furukawa Electric
Can any of the company-specific risk be diversified away by investing in both NVent Electric and Furukawa Electric 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 Furukawa Electric 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 Furukawa Electric Co, you can compare the effects of market volatilities on NVent Electric and Furukawa Electric 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 Furukawa Electric. Check out your portfolio center. Please also check ongoing floating volatility patterns of NVent Electric and Furukawa Electric.
Diversification Opportunities for NVent Electric and Furukawa Electric
0.42 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between NVent and Furukawa is 0.42. Overlapping area represents the amount of risk that can be diversified away by holding nVent Electric PLC and Furukawa Electric Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Furukawa Electric 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 Furukawa Electric. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Furukawa Electric has no effect on the direction of NVent Electric i.e., NVent Electric and Furukawa Electric go up and down completely randomly.
Pair Corralation between NVent Electric and Furukawa Electric
Considering the 90-day investment horizon NVent Electric is expected to generate 3.53 times less return on investment than Furukawa Electric. But when comparing it to its historical volatility, nVent Electric PLC is 2.1 times less risky than Furukawa Electric. It trades about 0.08 of its potential returns per unit of risk. Furukawa Electric Co is currently generating about 0.13 of returns per unit of risk over similar time horizon. If you would invest 1,608 in Furukawa Electric Co on August 31, 2024 and sell it today you would earn a total of 2,192 from holding Furukawa Electric Co or generate 136.32% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 48.13% |
| Values | Daily Returns |
nVent Electric PLC vs. Furukawa Electric Co
Performance |
| Timeline |
| nVent Electric PLC |
| Furukawa Electric |
NVent Electric and Furukawa Electric Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with NVent Electric and Furukawa Electric
The main advantage of trading using opposite NVent Electric and Furukawa Electric positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if NVent Electric position performs unexpectedly, Furukawa Electric 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 Furukawa Electric will offset losses from the drop in Furukawa Electric's long position.| NVent Electric vs. Hubbell | NVent Electric vs. Advanced Energy Industries | NVent Electric vs. Vertiv Holdings Co | NVent Electric vs. Energizer Holdings |
| Furukawa Electric vs. AFC Energy plc | Furukawa Electric vs. Loop Energy | Furukawa Electric vs. Sunrise New Energy | Furukawa Electric vs. Energizer 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 Insider Screener module to find insiders across different sectors to evaluate their impact on performance.
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