Correlation Between Enerpac Tool and Donaldson

Can any of the company-specific risk be diversified away by investing in both Enerpac Tool and Donaldson 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 Donaldson 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 Donaldson, you can compare the effects of market volatilities on Enerpac Tool and Donaldson 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 Donaldson. Check out your portfolio center. Please also check ongoing floating volatility patterns of Enerpac Tool and Donaldson.

Diversification Opportunities for Enerpac Tool and Donaldson

0.58

Correlation Coefficient

Enerpac Tool  Donaldson

Very weak diversification

The 3 months correlation between Enerpac and Donaldson is 0.58. Overlapping area represents the amount of risk that can be diversified away by holding Enerpac Tool Group and Donaldson in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Donaldson 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 Donaldson. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Donaldson has no effect on the direction of Enerpac Tool i.e., Enerpac Tool and Donaldson go up and down completely randomly.

Pair Corralation between Enerpac Tool and Donaldson

Given the investment horizon of 90 days Enerpac Tool Group is expected to generate 1.64 times more return on investment than Donaldson. However, Enerpac Tool is 1.64 times more volatile than Donaldson. It trades about 0.07 of its potential returns per unit of risk. Donaldson is currently generating about 0.01 per unit of risk. If you would invest  4,139  in Enerpac Tool Group on December 30, 2024 and sell it today you would earn a total of  341.00  from holding Enerpac Tool Group or generate 8.24% return on investment over 90 days.

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

Enerpac Tool Group  vs.  Donaldson

Enerpac Tool Group

Risk-Adjusted Performance

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Enerpac Tool Group are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. In spite of rather weak basic indicators, Enerpac Tool may actually be approaching a critical reversion point that can send shares even higher in April 2025.

Donaldson

Risk-Adjusted Performance

Very Weak

Over the last 90 days Donaldson has generated negative risk-adjusted returns adding no value to investors with long positions. Despite fairly strong fundamental indicators, Donaldson is not utilizing all of its potentials. The current stock price confusion, may contribute to short-horizon losses for the traders.

Pair Trading with Enerpac Tool and Donaldson

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

The idea behind Enerpac Tool Group and Donaldson 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.

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 Pattern Recognition module to use different Pattern Recognition models to time the market across multiple global exchanges.