Correlation Between Helios Technologies and Eaton PLC

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

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

Diversification Opportunities for Helios Technologies and Eaton PLC

0.84

Correlation Coefficient

Helios Technologies  Eaton PLC

Very poor diversification

The 3 months correlation between Helios and Eaton is 0.84. Overlapping area represents the amount of risk that can be diversified away by holding Helios Technologies and Eaton PLC in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Eaton PLC and Helios Technologies 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 Helios Technologies are associated (or correlated) with Eaton PLC. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Eaton PLC has no effect on the direction of Helios Technologies i.e., Helios Technologies and Eaton PLC go up and down completely randomly.

Pair Corralation between Helios Technologies and Eaton PLC

Given the investment horizon of 90 days Helios Technologies is expected to under-perform the Eaton PLC. In addition to that, Helios Technologies is 1.2 times more volatile than Eaton PLC. It trades about -0.49 of its total potential returns per unit of risk. Eaton PLC is currently generating about -0.28 per unit of volatility. If you would invest  37,105  in Eaton PLC on October 6, 2024 and sell it today you would lose (2,847) from holding Eaton PLC or give up 7.67% of portfolio value over 90 days.

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

Helios Technologies  vs.  Eaton PLC

Helios Technologies

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Helios Technologies has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of very healthy forward indicators, Helios Technologies is not utilizing all of its potentials. The recent stock price disarray, may contribute to short-term losses for the investors.

Eaton PLC

Risk-Adjusted Performance

2 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Eaton PLC are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. In spite of very healthy basic indicators, Eaton PLC is not utilizing all of its potentials. The latest stock price disarray, may contribute to short-term losses for the investors.

Pair Trading with Helios Technologies and Eaton PLC

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

The idea behind Helios Technologies and Eaton PLC 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 Sync Your Broker module to sync your existing holdings, watchlists, positions or portfolios from thousands of online brokerage services, banks, investment account aggregators and robo-advisors..