Correlation Between Vertiv Holdings and NVent Electric
Can any of the company-specific risk be diversified away by investing in both Vertiv Holdings and NVent Electric 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 Vertiv Holdings and NVent Electric into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Vertiv Holdings Co and nVent Electric PLC, you can compare the effects of market volatilities on Vertiv Holdings and NVent Electric 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 Vertiv Holdings with a short position of NVent Electric. Check out your portfolio center. Please also check ongoing floating volatility patterns of Vertiv Holdings and NVent Electric.
Diversification Opportunities for Vertiv Holdings and NVent Electric
0.92 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between Vertiv and NVent is 0.92. Overlapping area represents the amount of risk that can be diversified away by holding Vertiv Holdings Co and nVent Electric PLC in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on nVent Electric PLC and Vertiv Holdings 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 Vertiv Holdings Co are associated (or correlated) with NVent Electric. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of nVent Electric PLC has no effect on the direction of Vertiv Holdings i.e., Vertiv Holdings and NVent Electric go up and down completely randomly.
Pair Corralation between Vertiv Holdings and NVent Electric
Considering the 90-day investment horizon Vertiv Holdings Co is expected to generate 1.26 times more return on investment than NVent Electric. However, Vertiv Holdings is 1.26 times more volatile than nVent Electric PLC. It trades about 0.19 of its potential returns per unit of risk. nVent Electric PLC is currently generating about 0.08 per unit of risk. If you would invest 11,361 in Vertiv Holdings Co on August 28, 2024 and sell it today you would earn a total of 1,842 from holding Vertiv Holdings Co or generate 16.21% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Vertiv Holdings Co vs. nVent Electric PLC
Performance |
| Timeline |
| Vertiv Holdings |
| nVent Electric PLC |
Vertiv Holdings and NVent Electric Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Vertiv Holdings and NVent Electric
The main advantage of trading using opposite Vertiv Holdings and NVent Electric positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Vertiv Holdings position performs unexpectedly, NVent Electric 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 NVent Electric will offset losses from the drop in NVent Electric's long position.| Vertiv Holdings vs. nVent Electric PLC | Vertiv Holdings vs. Hubbell | Vertiv Holdings vs. Advanced Energy Industries | Vertiv Holdings vs. Energizer Holdings |
| NVent Electric vs. Hubbell | NVent Electric vs. Advanced Energy Industries | NVent Electric vs. Vertiv Holdings Co | NVent Electric 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 Fundamental Analysis module to view fundamental data based on most recent published financial statements.
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