Correlation Between Enerpac Tool and Regal Beloit

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

Diversification Opportunities for Enerpac Tool and Regal Beloit

0.29

Correlation Coefficient

Enerpac Tool  Regal Beloit

Modest diversification

The 3 months correlation between Enerpac and Regal is 0.29. Overlapping area represents the amount of risk that can be diversified away by holding Enerpac Tool Group and Regal Beloit in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Regal Beloit 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 Regal Beloit. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Regal Beloit has no effect on the direction of Enerpac Tool i.e., Enerpac Tool and Regal Beloit go up and down completely randomly.

Pair Corralation between Enerpac Tool and Regal Beloit

Given the investment horizon of 90 days Enerpac Tool Group is expected to generate 0.8 times more return on investment than Regal Beloit. However, Enerpac Tool Group is 1.25 times less risky than Regal Beloit. It trades about -0.06 of its potential returns per unit of risk. Regal Beloit is currently generating about -0.24 per unit of risk. If you would invest  4,921  in Enerpac Tool Group on December 1, 2024 and sell it today you would lose (294.00) from holding Enerpac Tool Group or give up 5.97% of portfolio value over 90 days.

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

Enerpac Tool Group  vs.  Regal Beloit

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.

Regal Beloit

Risk-Adjusted Performance

Very Weak

Over the last 90 days Regal Beloit has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of weak performance in the last few months, the Stock's basic indicators remain fairly 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.

Pair Trading with Enerpac Tool and Regal Beloit

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

The idea behind Enerpac Tool Group and Regal Beloit 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 Stocks Directory module to find actively traded stocks across global markets.