Correlation Between Eaton PLC and Mirion Technologies

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

By analyzing existing cross correlation between Eaton PLC and Mirion Technologies, you can compare the effects of market volatilities on Eaton PLC and Mirion Technologies 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 Eaton PLC with a short position of Mirion Technologies. Check out your portfolio center. Please also check ongoing floating volatility patterns of Eaton PLC and Mirion Technologies.

Diversification Opportunities for Eaton PLC and Mirion Technologies

0.9

Correlation Coefficient

Eaton PLC  Mirion Technologies

Almost no diversification

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

Pair Corralation between Eaton PLC and Mirion Technologies

Considering the 90-day investment horizon Eaton PLC is expected to generate 1.6 times less return on investment than Mirion Technologies. But when comparing it to its historical volatility, Eaton PLC is 1.31 times less risky than Mirion Technologies. It trades about 0.1 of its potential returns per unit of risk. Mirion Technologies is currently generating about 0.12 of returns per unit of risk over similar time horizon. If you would invest  776.00  in Mirion Technologies on September 12, 2024 and sell it today you would earn a total of  1,006  from holding Mirion Technologies or generate 129.64% return on investment over 90 days.

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

Eaton PLC  vs.  Mirion Technologies

Eaton PLC

Risk-Adjusted Performance

14 of 100

Good

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

Mirion Technologies

Risk-Adjusted Performance

29 of 100

Strong

Compared to the overall equity markets, risk-adjusted returns on investments in Mirion Technologies are ranked lower than 29 (%) of all global equities and portfolios over the last 90 days. Even with relatively abnormal forward indicators, Mirion Technologies reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Eaton PLC and Mirion Technologies

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

The idea behind Eaton PLC and Mirion 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 Money Flow Index module to determine momentum by analyzing Money Flow Index and other technical indicators.