Correlation Between Yokogawa Electric and Eaton PLC
Can any of the company-specific risk be diversified away by investing in both Yokogawa Electric and Eaton PLC 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 Yokogawa Electric and Eaton PLC into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Yokogawa Electric and Eaton PLC, you can compare the effects of market volatilities on Yokogawa Electric and Eaton PLC 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 Yokogawa Electric with a short position of Eaton PLC. Check out your portfolio center. Please also check ongoing floating volatility patterns of Yokogawa Electric and Eaton PLC.
Diversification Opportunities for Yokogawa Electric and Eaton PLC
0.77 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Yokogawa and Eaton is 0.77. Overlapping area represents the amount of risk that can be diversified away by holding Yokogawa Electric and Eaton PLC in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Eaton PLC and Yokogawa Electric 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 Yokogawa Electric are associated (or correlated) with Eaton PLC. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Eaton PLC has no effect on the direction of Yokogawa Electric i.e., Yokogawa Electric and Eaton PLC go up and down completely randomly.
Pair Corralation between Yokogawa Electric and Eaton PLC
Assuming the 90 days horizon Yokogawa Electric is expected to under-perform the Eaton PLC. In addition to that, Yokogawa Electric is 46.38 times more volatile than Eaton PLC. It trades about -0.09 of its total potential returns per unit of risk. Eaton PLC is currently generating about 0.11 per unit of volatility. If you would invest 15,558 in Eaton PLC on August 26, 2024 and sell it today you would earn a total of 22,183 from holding Eaton PLC or generate 142.58% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 31.99% |
| Values | Daily Returns |
Yokogawa Electric vs. Eaton PLC
Performance |
| Timeline |
| Yokogawa Electric |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Very Weak
| Eaton PLC |
Yokogawa Electric and Eaton PLC Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Yokogawa Electric and Eaton PLC
The main advantage of trading using opposite Yokogawa Electric and Eaton PLC positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Yokogawa Electric position performs unexpectedly, Eaton PLC 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 Eaton PLC will offset losses from the drop in Eaton PLC's long position.| Yokogawa Electric vs. Daifuku Co | Yokogawa Electric vs. Eaton PLC | Yokogawa Electric vs. Yokogawa Electric Corp | Yokogawa Electric vs. Nidec |
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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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