Correlation Between Ametek and Enerpac Tool

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

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

Diversification Opportunities for Ametek and Enerpac Tool

0.89

Correlation Coefficient

Ametek  Enerpac Tool

Very poor diversification

The 3 months correlation between Ametek and Enerpac is 0.89. Overlapping area represents the amount of risk that can be diversified away by holding Ametek Inc 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 Ametek 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 Ametek Inc 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 Ametek i.e., Ametek and Enerpac Tool go up and down completely randomly.

Pair Corralation between Ametek and Enerpac Tool

Considering the 90-day investment horizon Ametek is expected to generate 1.37 times less return on investment than Enerpac Tool. But when comparing it to its historical volatility, Ametek Inc is 1.23 times less risky than Enerpac Tool. It trades about 0.18 of its potential returns per unit of risk. Enerpac Tool Group is currently generating about 0.2 of returns per unit of risk over similar time horizon. If you would invest  3,988  in Enerpac Tool Group on September 4, 2024 and sell it today you would earn a total of  933.00  from holding Enerpac Tool Group or generate 23.4% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Strong
Accuracy	98.44%
Values	Daily Returns

Ametek Inc  vs.  Enerpac Tool Group

Ametek Inc

Risk-Adjusted Performance

13 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Ametek Inc are ranked lower than 13 (%) of all global equities and portfolios over the last 90 days. In spite of rather fragile primary indicators, Ametek exhibited solid returns over the last few months and may actually be approaching a breakup point.

Enerpac Tool Group

Risk-Adjusted Performance

15 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Enerpac Tool Group are ranked lower than 15 (%) of all global equities and portfolios over the last 90 days. In spite of rather weak basic indicators, Enerpac Tool exhibited solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Ametek and Enerpac Tool

The main advantage of trading using opposite Ametek and Enerpac Tool positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Ametek 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 Ametek Inc 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.

Check out your portfolio center.

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 Channel module to use Commodity Channel Index to analyze current equity momentum.