Correlation Between Eos Energy and NVent Electric

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

By analyzing existing cross correlation between Eos Energy Enterprises and nVent Electric PLC, you can compare the effects of market volatilities on Eos Energy 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 Eos Energy with a short position of NVent Electric. Check out your portfolio center. Please also check ongoing floating volatility patterns of Eos Energy and NVent Electric.

Diversification Opportunities for Eos Energy and NVent Electric

0.31

Correlation Coefficient

Eos Energy  NVent Electric

Weak diversification

The 3 months correlation between Eos and NVent is 0.31. Overlapping area represents the amount of risk that can be diversified away by holding Eos Energy Enterprises 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 Eos Energy 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 Eos Energy Enterprises 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 Eos Energy i.e., Eos Energy and NVent Electric go up and down completely randomly.

Pair Corralation between Eos Energy and NVent Electric

Given the investment horizon of 90 days Eos Energy Enterprises is expected to under-perform the NVent Electric. In addition to that, Eos Energy is 2.05 times more volatile than nVent Electric PLC. It trades about -0.12 of its total potential returns per unit of risk. nVent Electric PLC is currently generating about 0.05 per unit of volatility. If you would invest  7,459  in nVent Electric PLC on August 30, 2024 and sell it today you would earn a total of  195.00  from holding nVent Electric PLC or generate 2.61% return on investment over 90 days.

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

Eos Energy Enterprises  vs.  nVent Electric PLC

Eos Energy Enterprises

Risk-Adjusted Performance

2 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Eos Energy Enterprises are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. In spite of rather weak basic indicators, Eos Energy may actually be approaching a critical reversion point that can send shares even higher in December 2024.

nVent Electric PLC

Risk-Adjusted Performance

6 of 100

Modest

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

Pair Trading with Eos Energy and NVent Electric

The main advantage of trading using opposite Eos Energy and NVent Electric positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Eos Energy 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.

The idea behind Eos Energy Enterprises and nVent Electric PLC 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 Latest Portfolios module to quick portfolio dashboard that showcases your latest portfolios.