Correlation Between Preformed Line and Plug Power
Can any of the company-specific risk be diversified away by investing in both Preformed Line and Plug Power 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 Preformed Line and Plug Power into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Preformed Line Products and Plug Power, you can compare the effects of market volatilities on Preformed Line and Plug Power 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 Preformed Line with a short position of Plug Power. Check out your portfolio center. Please also check ongoing floating volatility patterns of Preformed Line and Plug Power.
Diversification Opportunities for Preformed Line and Plug Power
0.14 | Correlation Coefficient |
Average diversification
The 3 months correlation between Preformed and Plug is 0.14. Overlapping area represents the amount of risk that can be diversified away by holding Preformed Line Products and Plug Power in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Plug Power and Preformed Line 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 Preformed Line Products are associated (or correlated) with Plug Power. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Plug Power has no effect on the direction of Preformed Line i.e., Preformed Line and Plug Power go up and down completely randomly.
Pair Corralation between Preformed Line and Plug Power
Given the investment horizon of 90 days Preformed Line Products is expected to under-perform the Plug Power. But the stock apears to be less risky and, when comparing its historical volatility, Preformed Line Products is 4.09 times less risky than Plug Power. The stock trades about -0.21 of its potential returns per unit of risk. The Plug Power is currently generating about 0.19 of returns per unit of risk over similar time horizon. If you would invest 199.00 in Plug Power on September 12, 2024 and sell it today you would earn a total of 52.00 from holding Plug Power or generate 26.13% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 95.45% |
| Values | Daily Returns |
Preformed Line Products vs. Plug Power
Performance |
| Timeline |
| Preformed Line Products |
| Plug Power |
Preformed Line and Plug Power Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Preformed Line and Plug Power
The main advantage of trading using opposite Preformed Line and Plug Power positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Preformed Line position performs unexpectedly, Plug Power 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 Plug Power will offset losses from the drop in Plug Power's long position.| Preformed Line vs. Kimball Electronics | Preformed Line vs. nVent Electric PLC | Preformed Line vs. Espey Mfg Electronics | Preformed Line vs. Hubbell |
| Plug Power vs. Energizer Holdings | Plug Power vs. Acuity Brands | Plug Power vs. Espey Mfg Electronics | Plug Power vs. Preformed Line Products |
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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