Correlation Between NVent Electric and Hubbell
Can any of the company-specific risk be diversified away by investing in both NVent Electric and Hubbell 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 Hubbell 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 Hubbell, you can compare the effects of market volatilities on NVent Electric and Hubbell 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 Hubbell. Check out your portfolio center. Please also check ongoing floating volatility patterns of NVent Electric and Hubbell.
Diversification Opportunities for NVent Electric and Hubbell
0.91 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between NVent and Hubbell is 0.91. Overlapping area represents the amount of risk that can be diversified away by holding nVent Electric PLC and Hubbell in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Hubbell 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 Hubbell. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Hubbell has no effect on the direction of NVent Electric i.e., NVent Electric and Hubbell go up and down completely randomly.
Pair Corralation between NVent Electric and Hubbell
Considering the 90-day investment horizon nVent Electric PLC is expected to generate 1.63 times more return on investment than Hubbell. However, NVent Electric is 1.63 times more volatile than Hubbell. It trades about -0.05 of its potential returns per unit of risk. Hubbell is currently generating about -0.21 per unit of risk. If you would invest 7,232 in nVent Electric PLC on November 18, 2024 and sell it today you would lose (399.00) from holding nVent Electric PLC or give up 5.52% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
nVent Electric PLC vs. Hubbell
Performance |
| Timeline |
| nVent Electric PLC |
| Hubbell |
NVent Electric and Hubbell Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with NVent Electric and Hubbell
The main advantage of trading using opposite NVent Electric and Hubbell positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if NVent Electric position performs unexpectedly, Hubbell 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 Hubbell will offset losses from the drop in Hubbell's long position.| NVent Electric vs. Hubbell | NVent Electric vs. Advanced Energy Industries | NVent Electric vs. Vertiv Holdings Co | NVent Electric vs. Energizer Holdings |
| Hubbell vs. Advanced Energy Industries | Hubbell vs. Enersys | Hubbell vs. Acuity Brands | Hubbell 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 Portfolio Manager module to state of the art Portfolio Manager to monitor and improve performance of your invested capital.
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