Correlation Between NVent Electric and Magnis Energy
Can any of the company-specific risk be diversified away by investing in both NVent Electric and Magnis Energy 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 Magnis Energy 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 Magnis Energy Technologies, you can compare the effects of market volatilities on NVent Electric and Magnis Energy 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 Magnis Energy. Check out your portfolio center. Please also check ongoing floating volatility patterns of NVent Electric and Magnis Energy.
Diversification Opportunities for NVent Electric and Magnis Energy
0.29 | Correlation Coefficient |
Modest diversification
The 3 months correlation between NVent and Magnis is 0.29. Overlapping area represents the amount of risk that can be diversified away by holding nVent Electric PLC and Magnis Energy Technologies in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Magnis Energy Techno 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 Magnis Energy. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Magnis Energy Techno has no effect on the direction of NVent Electric i.e., NVent Electric and Magnis Energy go up and down completely randomly.
Pair Corralation between NVent Electric and Magnis Energy
Considering the 90-day investment horizon NVent Electric is expected to generate 6.09 times less return on investment than Magnis Energy. But when comparing it to its historical volatility, nVent Electric PLC is 2.42 times less risky than Magnis Energy. It trades about 0.08 of its potential returns per unit of risk. Magnis Energy Technologies is currently generating about 0.21 of returns per unit of risk over similar time horizon. If you would invest 2.00 in Magnis Energy Technologies on September 1, 2024 and sell it today you would earn a total of 0.75 from holding Magnis Energy Technologies or generate 37.5% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 95.45% |
| Values | Daily Returns |
nVent Electric PLC vs. Magnis Energy Technologies
Performance |
| Timeline |
| nVent Electric PLC |
| Magnis Energy Techno |
NVent Electric and Magnis Energy Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with NVent Electric and Magnis Energy
The main advantage of trading using opposite NVent Electric and Magnis Energy positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if NVent Electric position performs unexpectedly, Magnis Energy 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 Magnis Energy will offset losses from the drop in Magnis Energy's long position.| NVent Electric vs. Hubbell | NVent Electric vs. Advanced Energy Industries | NVent Electric vs. Vertiv Holdings Co | NVent Electric vs. Energizer Holdings |
| Magnis Energy vs. AFC Energy plc | Magnis Energy vs. Loop Energy | Magnis Energy vs. Sunrise New Energy | Magnis Energy 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 Idea Analyzer module to analyze all characteristics, volatility and risk-adjusted return of Macroaxis ideas.
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