Correlation Between Natures Miracle and Eaton PLC

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

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

Diversification Opportunities for Natures Miracle and Eaton PLC

-0.07

Correlation Coefficient

Natures Miracle  Eaton PLC

Good diversification

The 3 months correlation between Natures and Eaton is -0.07. Overlapping area represents the amount of risk that can be diversified away by holding Natures Miracle Holding and Eaton PLC in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Eaton PLC and Natures Miracle 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 Natures Miracle Holding 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 Natures Miracle i.e., Natures Miracle and Eaton PLC go up and down completely randomly.

Pair Corralation between Natures Miracle and Eaton PLC

Given the investment horizon of 90 days Natures Miracle Holding is expected to under-perform the Eaton PLC. In addition to that, Natures Miracle is 5.15 times more volatile than Eaton PLC. It trades about -0.1 of its total potential returns per unit of risk. Eaton PLC is currently generating about 0.1 per unit of volatility. If you would invest  15,847  in Eaton PLC on October 23, 2024 and sell it today you would earn a total of  19,726  from holding Eaton PLC or generate 124.48% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	99.8%
Values	Daily Returns

Natures Miracle Holding  vs.  Eaton PLC

Natures Miracle Holding

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Natures Miracle Holding has generated negative risk-adjusted returns adding no value to investors with long positions. Despite conflicting performance in the last few months, the Stock's technical indicators remain fairly strong which may send shares a bit higher in February 2025. The recent confusion may also be a sign of long-lasting up-swing for the firm traders.

Eaton PLC

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Eaton PLC are ranked lower than 1 (%) 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 Natures Miracle and Eaton PLC

The main advantage of trading using opposite Natures Miracle and Eaton PLC positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Natures Miracle 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 Natures Miracle Holding 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 Positions Ratings module to determine portfolio positions ratings based on digital equity recommendations. Macroaxis instant position ratings are based on combination of fundamental analysis and risk-adjusted market performance.