Correlation Between NVent Electric and Hydrogen Engine
Can any of the company-specific risk be diversified away by investing in both NVent Electric and Hydrogen Engine 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 Hydrogen Engine 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 Hydrogen Engine Center, you can compare the effects of market volatilities on NVent Electric and Hydrogen Engine 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 Hydrogen Engine. Check out your portfolio center. Please also check ongoing floating volatility patterns of NVent Electric and Hydrogen Engine.
Diversification Opportunities for NVent Electric and Hydrogen Engine
-0.16 | Correlation Coefficient |
Good diversification
The 3 months correlation between NVent and Hydrogen is -0.16. Overlapping area represents the amount of risk that can be diversified away by holding nVent Electric PLC and Hydrogen Engine Center in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Hydrogen Engine Center 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 Hydrogen Engine. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Hydrogen Engine Center has no effect on the direction of NVent Electric i.e., NVent Electric and Hydrogen Engine go up and down completely randomly.
Pair Corralation between NVent Electric and Hydrogen Engine
Considering the 90-day investment horizon NVent Electric is expected to generate 70.6 times less return on investment than Hydrogen Engine. But when comparing it to its historical volatility, nVent Electric PLC is 41.69 times less risky than Hydrogen Engine. It trades about 0.07 of its potential returns per unit of risk. Hydrogen Engine Center is currently generating about 0.12 of returns per unit of risk over similar time horizon. If you would invest 0.02 in Hydrogen Engine Center on August 28, 2024 and sell it today you would earn a total of 0.63 from holding Hydrogen Engine Center or generate 3150.0% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
nVent Electric PLC vs. Hydrogen Engine Center
Performance |
| Timeline |
| nVent Electric PLC |
| Hydrogen Engine Center |
NVent Electric and Hydrogen Engine Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with NVent Electric and Hydrogen Engine
The main advantage of trading using opposite NVent Electric and Hydrogen Engine positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if NVent Electric position performs unexpectedly, Hydrogen Engine 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 Hydrogen Engine will offset losses from the drop in Hydrogen Engine's long position.| NVent Electric vs. Hubbell | NVent Electric vs. Advanced Energy Industries | NVent Electric vs. Vertiv Holdings Co | NVent Electric vs. Energizer Holdings |
| Hydrogen Engine vs. Hydrogen Hybrid Technologies | Hydrogen Engine vs. Manhattan Scients | Hydrogen Engine vs. SunHydrogen | Hydrogen Engine vs. AFC Energy plc |
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 Analyst Advice module to analyst recommendations and target price estimates broken down by several categories.
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