Correlation Between Thyssenkrupp and ESAB Corp
Can any of the company-specific risk be diversified away by investing in both Thyssenkrupp and ESAB Corp 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 Thyssenkrupp and ESAB Corp into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Thyssenkrupp AG ON and ESAB Corp, you can compare the effects of market volatilities on Thyssenkrupp and ESAB Corp 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 Thyssenkrupp with a short position of ESAB Corp. Check out your portfolio center. Please also check ongoing floating volatility patterns of Thyssenkrupp and ESAB Corp.
Diversification Opportunities for Thyssenkrupp and ESAB Corp
0.24 | Correlation Coefficient |
Modest diversification
The 3 months correlation between Thyssenkrupp and ESAB is 0.24. Overlapping area represents the amount of risk that can be diversified away by holding Thyssenkrupp AG ON and ESAB Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ESAB Corp and Thyssenkrupp 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 Thyssenkrupp AG ON are associated (or correlated) with ESAB Corp. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of ESAB Corp has no effect on the direction of Thyssenkrupp i.e., Thyssenkrupp and ESAB Corp go up and down completely randomly.
Pair Corralation between Thyssenkrupp and ESAB Corp
Assuming the 90 days horizon Thyssenkrupp AG ON is expected to under-perform the ESAB Corp. In addition to that, Thyssenkrupp is 1.98 times more volatile than ESAB Corp. It trades about 0.0 of its total potential returns per unit of risk. ESAB Corp is currently generating about 0.13 per unit of volatility. If you would invest 9,538 in ESAB Corp on September 3, 2024 and sell it today you would earn a total of 3,507 from holding ESAB Corp or generate 36.77% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Thyssenkrupp AG ON vs. ESAB Corp
Performance |
| Timeline |
| Thyssenkrupp AG ON |
| ESAB Corp |
Thyssenkrupp and ESAB Corp Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Thyssenkrupp and ESAB Corp
The main advantage of trading using opposite Thyssenkrupp and ESAB Corp positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Thyssenkrupp position performs unexpectedly, ESAB Corp 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 ESAB Corp will offset losses from the drop in ESAB Corp's long position.| Thyssenkrupp vs. ESAB Corp | Thyssenkrupp vs. Worthington Industries | Thyssenkrupp vs. Allegheny Technologies Incorporated | Thyssenkrupp vs. Insteel Industries |
| ESAB Corp vs. Northwest Pipe | ESAB Corp vs. Mayville Engineering Co | ESAB Corp vs. Ryerson Holding Corp | ESAB Corp vs. Allegheny Technologies Incorporated |
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 Backtesting module to avoid under-diversification and over-optimization by backtesting your portfolios.
Other Complementary Tools
| Portfolio Diagnostics Use generated alerts and portfolio events aggregator to diagnose current holdings | |
| Portfolio Volatility Check portfolio volatility and analyze historical return density to properly model market risk | |
| Bond Analysis Evaluate and analyze corporate bonds as a potential investment for your portfolios. | |
| Insider Screener Find insiders across different sectors to evaluate their impact on performance | |
| Investing Opportunities Build portfolios using our predefined set of ideas and optimize them against your investing preferences |