Correlation Between Enerpac Tool and Ametek

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

By analyzing existing cross correlation between Enerpac Tool Group and Ametek Inc, you can compare the effects of market volatilities on Enerpac Tool and Ametek 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 Enerpac Tool with a short position of Ametek. Check out your portfolio center. Please also check ongoing floating volatility patterns of Enerpac Tool and Ametek.

Diversification Opportunities for Enerpac Tool and Ametek

0.83

Correlation Coefficient

Enerpac Tool  Ametek

Very poor diversification

The 3 months correlation between Enerpac and Ametek is 0.83. Overlapping area represents the amount of risk that can be diversified away by holding Enerpac Tool Group and Ametek Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Ametek Inc and Enerpac Tool 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 Enerpac Tool Group are associated (or correlated) with Ametek. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Ametek Inc has no effect on the direction of Enerpac Tool i.e., Enerpac Tool and Ametek go up and down completely randomly.

Pair Corralation between Enerpac Tool and Ametek

Given the investment horizon of 90 days Enerpac Tool Group is expected to under-perform the Ametek. In addition to that, Enerpac Tool is 1.47 times more volatile than Ametek Inc. It trades about -0.06 of its total potential returns per unit of risk. Ametek Inc is currently generating about -0.06 per unit of volatility. If you would invest  19,410  in Ametek Inc on November 28, 2024 and sell it today you would lose (715.00) from holding Ametek Inc or give up 3.68% of portfolio value over 90 days.

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

Enerpac Tool Group  vs.  Ametek Inc

Enerpac Tool Group

Risk-Adjusted Performance

Very Weak

Over the last 90 days Enerpac Tool Group has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of rather sound basic indicators, Enerpac Tool is not utilizing all of its potentials. The current stock price tumult, may contribute to shorter-term losses for the shareholders.

Ametek Inc

Risk-Adjusted Performance

Very Weak

Over the last 90 days Ametek Inc has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of rather sound primary indicators, Ametek is not utilizing all of its potentials. The current stock price tumult, may contribute to shorter-term losses for the shareholders.

Pair Trading with Enerpac Tool and Ametek

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

The idea behind Enerpac Tool Group and Ametek Inc 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 Idea Breakdown module to analyze constituents of all Macroaxis ideas. Macroaxis investment ideas are predefined, sector-focused investing themes.