Correlation Between Thermon Group and Enpro Industries
Can any of the company-specific risk be diversified away by investing in both Thermon Group and Enpro Industries 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 Thermon Group and Enpro Industries into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Thermon Group Holdings and Enpro Industries, you can compare the effects of market volatilities on Thermon Group and Enpro Industries 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 Thermon Group with a short position of Enpro Industries. Check out your portfolio center. Please also check ongoing floating volatility patterns of Thermon Group and Enpro Industries.
Diversification Opportunities for Thermon Group and Enpro Industries
0.84 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Thermon and Enpro is 0.84. Overlapping area represents the amount of risk that can be diversified away by holding Thermon Group Holdings and Enpro Industries in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Enpro Industries and Thermon Group 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 Thermon Group Holdings are associated (or correlated) with Enpro Industries. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Enpro Industries has no effect on the direction of Thermon Group i.e., Thermon Group and Enpro Industries go up and down completely randomly.
Pair Corralation between Thermon Group and Enpro Industries
Considering the 90-day investment horizon Thermon Group is expected to generate 1.46 times less return on investment than Enpro Industries. But when comparing it to its historical volatility, Thermon Group Holdings is 1.12 times less risky than Enpro Industries. It trades about 0.32 of its potential returns per unit of risk. Enpro Industries is currently generating about 0.42 of returns per unit of risk over similar time horizon. If you would invest 14,799 in Enpro Industries on August 31, 2024 and sell it today you would earn a total of 4,003 from holding Enpro Industries or generate 27.05% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 95.65% |
| Values | Daily Returns |
Thermon Group Holdings vs. Enpro Industries
Performance |
| Timeline |
| Thermon Group Holdings |
| Enpro Industries |
Thermon Group and Enpro Industries Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Thermon Group and Enpro Industries
The main advantage of trading using opposite Thermon Group and Enpro Industries positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Thermon Group position performs unexpectedly, Enpro Industries 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 Enpro Industries will offset losses from the drop in Enpro Industries' long position.| Thermon Group vs. Hurco Companies | Thermon Group vs. Enerpac Tool Group | Thermon Group vs. Enpro Industries | Thermon Group vs. Omega Flex |
| Enpro Industries vs. Helios Technologies | Enpro Industries vs. Omega Flex | Enpro Industries vs. Luxfer Holdings PLC | Enpro Industries vs. Hurco Companies |
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 Balance Of Power module to check stock momentum by analyzing Balance Of Power indicator and other technical ratios.
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