Correlation Between Eaton Plc and Bardella

Can any of the company-specific risk be diversified away by investing in both Eaton Plc and Bardella 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 Eaton Plc and Bardella into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Eaton plc and Bardella SA Indstrias, you can compare the effects of market volatilities on Eaton Plc and Bardella 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 Eaton Plc with a short position of Bardella. Check out your portfolio center. Please also check ongoing floating volatility patterns of Eaton Plc and Bardella.

Diversification Opportunities for Eaton Plc and Bardella

-0.4

Correlation Coefficient

Eaton Plc  Bardella

Very good diversification

The 3 months correlation between Eaton and Bardella is -0.4. Overlapping area represents the amount of risk that can be diversified away by holding Eaton plc and Bardella SA Indstrias in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Bardella SA Indstrias and Eaton Plc 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 Eaton plc are associated (or correlated) with Bardella. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Bardella SA Indstrias has no effect on the direction of Eaton Plc i.e., Eaton Plc and Bardella go up and down completely randomly.

Pair Corralation between Eaton Plc and Bardella

Assuming the 90 days trading horizon Eaton plc is expected to under-perform the Bardella. But the stock apears to be less risky and, when comparing its historical volatility, Eaton plc is 1.37 times less risky than Bardella. The stock trades about -0.16 of its potential returns per unit of risk. The Bardella SA Indstrias is currently generating about 0.08 of returns per unit of risk over similar time horizon. If you would invest  803.00  in Bardella SA Indstrias on December 4, 2024 and sell it today you would earn a total of  117.00  from holding Bardella SA Indstrias or generate 14.57% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	100.0%
Values	Daily Returns

Eaton plc  vs.  Bardella SA Indstrias

Eaton plc

Risk-Adjusted Performance

Very Weak

Over the last 90 days Eaton plc has generated negative risk-adjusted returns adding no value to investors with long positions. Despite weak performance in the last few months, the Stock's basic indicators remain somewhat strong which may send shares a bit higher in April 2025. The current disturbance may also be a sign of long term up-swing for the company investors.

Bardella SA Indstrias

Risk-Adjusted Performance

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Bardella SA Indstrias are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively uncertain basic indicators, Bardella unveiled solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Eaton Plc and Bardella

The main advantage of trading using opposite Eaton Plc and Bardella positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Eaton Plc position performs unexpectedly, Bardella 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 Bardella will offset losses from the drop in Bardella's long position.

The idea behind Eaton plc and Bardella SA Indstrias pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.

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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 Insider Screener module to find insiders across different sectors to evaluate their impact on performance.