Correlation Between Encore Wire and Espey Mfg
Can any of the company-specific risk be diversified away by investing in both Encore Wire and Espey Mfg 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 Encore Wire and Espey Mfg into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Encore Wire and Espey Mfg Electronics, you can compare the effects of market volatilities on Encore Wire and Espey Mfg 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 Encore Wire with a short position of Espey Mfg. Check out your portfolio center. Please also check ongoing floating volatility patterns of Encore Wire and Espey Mfg.
Diversification Opportunities for Encore Wire and Espey Mfg
0.64 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Encore and Espey is 0.64. Overlapping area represents the amount of risk that can be diversified away by holding Encore Wire and Espey Mfg Electronics in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Espey Mfg Electronics and Encore Wire 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 Encore Wire are associated (or correlated) with Espey Mfg. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Espey Mfg Electronics has no effect on the direction of Encore Wire i.e., Encore Wire and Espey Mfg go up and down completely randomly.
Pair Corralation between Encore Wire and Espey Mfg
If you would invest 28,984 in Encore Wire on August 27, 2024 and sell it today you would earn a total of 0.00 from holding Encore Wire or generate 0.0% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 4.76% |
| Values | Daily Returns |
Encore Wire vs. Espey Mfg Electronics
Performance |
| Timeline |
| Encore Wire |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Very Weak
| Espey Mfg Electronics |
Encore Wire and Espey Mfg Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Encore Wire and Espey Mfg
The main advantage of trading using opposite Encore Wire and Espey Mfg positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Encore Wire position performs unexpectedly, Espey Mfg 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 Espey Mfg will offset losses from the drop in Espey Mfg's long position.| Encore Wire vs. Advanced Energy Industries | Encore Wire vs. Acuity Brands | Encore Wire vs. Enersys | Encore Wire vs. nVent Electric PLC |
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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 Bollinger Bands module to use Bollinger Bands indicator to analyze target price for a given investing horizon.
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