Correlation Between Rockwell Automation and Enerpac Tool

Can any of the company-specific risk be diversified away by investing in both Rockwell Automation and Enerpac Tool 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 Rockwell Automation and Enerpac Tool into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Rockwell Automation and Enerpac Tool Group, you can compare the effects of market volatilities on Rockwell Automation and Enerpac Tool 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 Rockwell Automation with a short position of Enerpac Tool. Check out your portfolio center. Please also check ongoing floating volatility patterns of Rockwell Automation and Enerpac Tool.

Diversification Opportunities for Rockwell Automation and Enerpac Tool

0.51

Correlation Coefficient

Rockwell Automation  Enerpac Tool

Very weak diversification

The 3 months correlation between Rockwell and Enerpac is 0.51. Overlapping area represents the amount of risk that can be diversified away by holding Rockwell Automation and Enerpac Tool Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Enerpac Tool Group and Rockwell Automation 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 Rockwell Automation are associated (or correlated) with Enerpac Tool. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Enerpac Tool Group has no effect on the direction of Rockwell Automation i.e., Rockwell Automation and Enerpac Tool go up and down completely randomly.

Pair Corralation between Rockwell Automation and Enerpac Tool

Considering the 90-day investment horizon Rockwell Automation is expected to generate 4.57 times less return on investment than Enerpac Tool. In addition to that, Rockwell Automation is 1.07 times more volatile than Enerpac Tool Group. It trades about 0.01 of its total potential returns per unit of risk. Enerpac Tool Group is currently generating about 0.06 per unit of volatility. If you would invest  2,504  in Enerpac Tool Group on October 5, 2024 and sell it today you would earn a total of  1,522  from holding Enerpac Tool Group or generate 60.78% return on investment over 90 days.

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

Rockwell Automation  vs.  Enerpac Tool Group

Rockwell Automation

Risk-Adjusted Performance

4 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Rockwell Automation are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. Despite quite abnormal basic indicators, Rockwell Automation may actually be approaching a critical reversion point that can send shares even higher in February 2025.

Enerpac Tool Group

Risk-Adjusted Performance

0 of 100

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.

Pair Trading with Rockwell Automation and Enerpac Tool

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

The idea behind Rockwell Automation and Enerpac Tool Group 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 Commodity Directory module to find actively traded commodities issued by global exchanges.