Correlation Between Enerpac Tool and Mativ Holdings

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

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

Diversification Opportunities for Enerpac Tool and Mativ Holdings

-0.83

Correlation Coefficient

Enerpac Tool  Mativ Holdings

Pay attention - limited upside

The 3 months correlation between Enerpac and Mativ is -0.83. Overlapping area represents the amount of risk that can be diversified away by holding Enerpac Tool Group and Mativ Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Mativ Holdings and Enerpac Tool 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 Enerpac Tool Group are associated (or correlated) with Mativ Holdings. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Mativ Holdings has no effect on the direction of Enerpac Tool i.e., Enerpac Tool and Mativ Holdings go up and down completely randomly.

Pair Corralation between Enerpac Tool and Mativ Holdings

Given the investment horizon of 90 days Enerpac Tool Group is expected to generate 0.47 times more return on investment than Mativ Holdings. However, Enerpac Tool Group is 2.12 times less risky than Mativ Holdings. It trades about 0.18 of its potential returns per unit of risk. Mativ Holdings is currently generating about -0.12 per unit of risk. If you would invest  3,983  in Enerpac Tool Group on September 2, 2024 and sell it today you would earn a total of  843.00  from holding Enerpac Tool Group or generate 21.16% return on investment over 90 days.

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

Enerpac Tool Group  vs.  Mativ Holdings

Enerpac Tool Group

Risk-Adjusted Performance

14 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Enerpac Tool Group are ranked lower than 14 (%) 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.

Mativ Holdings

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Mativ Holdings has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of unsteady performance in the last few months, the Stock's basic indicators remain fairly stable which may send shares a bit higher in January 2025. The latest fuss may also be a sign of long-term up-swing for the venture sophisticated investors.

Pair Trading with Enerpac Tool and Mativ Holdings

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

The idea behind Enerpac Tool Group and Mativ Holdings 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 Premium Stories module to follow Macroaxis premium stories from verified contributors across different equity types, categories and coverage scope.