Correlation Between Enerpac Tool and John Bean

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

Diversification Opportunities for Enerpac Tool and John Bean

0.9

Correlation Coefficient

Enerpac Tool  John Bean

Almost no diversification

The 3 months correlation between Enerpac and John is 0.9. Overlapping area represents the amount of risk that can be diversified away by holding Enerpac Tool Group and John Bean Technologies in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on John Bean Technologies 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 John Bean. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of John Bean Technologies has no effect on the direction of Enerpac Tool i.e., Enerpac Tool and John Bean go up and down completely randomly.

Pair Corralation between Enerpac Tool and John Bean

Given the investment horizon of 90 days Enerpac Tool is expected to generate 1.04 times less return on investment than John Bean. In addition to that, Enerpac Tool is 1.23 times more volatile than John Bean Technologies. It trades about 0.18 of its total potential returns per unit of risk. John Bean Technologies is currently generating about 0.22 per unit of volatility. If you would invest  11,491  in John Bean Technologies on September 2, 2024 and sell it today you would earn a total of  1,111  from holding John Bean Technologies or generate 9.67% return on investment over 90 days.

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

Enerpac Tool Group  vs.  John Bean Technologies

Enerpac Tool Group

Risk-Adjusted Performance

14 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Enerpac Tool Group are ranked lower than 14 (%) of all global equities and portfolios over the last 90 days. In spite of rather weak basic indicators, Enerpac Tool exhibited solid returns over the last few months and may actually be approaching a breakup point.

John Bean Technologies

Risk-Adjusted Performance

16 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in John Bean Technologies are ranked lower than 16 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively abnormal fundamental drivers, John Bean unveiled solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Enerpac Tool and John Bean

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

The idea behind Enerpac Tool Group and John Bean Technologies 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 Alpha Finder module to use alpha and beta coefficients to find investment opportunities after accounting for the risk.