Correlation Between Enerpac Tool and Regal Beloit

Can any of the company-specific risk be diversified away by investing in both Enerpac Tool and Regal Beloit 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 Regal Beloit 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 Regal Beloit, you can compare the effects of market volatilities on Enerpac Tool and Regal Beloit 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 Regal Beloit. Check out your portfolio center. Please also check ongoing floating volatility patterns of Enerpac Tool and Regal Beloit.

Diversification Opportunities for Enerpac Tool and Regal Beloit

0.75

Correlation Coefficient

Enerpac Tool  Regal Beloit

Poor diversification

The 3 months correlation between Enerpac and Regal is 0.75. Overlapping area represents the amount of risk that can be diversified away by holding Enerpac Tool Group and Regal Beloit in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Regal Beloit 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 Regal Beloit. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Regal Beloit has no effect on the direction of Enerpac Tool i.e., Enerpac Tool and Regal Beloit go up and down completely randomly.

Pair Corralation between Enerpac Tool and Regal Beloit

Given the investment horizon of 90 days Enerpac Tool Group is expected to generate 0.76 times more return on investment than Regal Beloit. However, Enerpac Tool Group is 1.32 times less risky than Regal Beloit. It trades about 0.18 of its potential returns per unit of risk. Regal Beloit is currently generating about 0.08 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 Together
Strength	Significant
Accuracy	100.0%
Values	Daily Returns

Enerpac Tool Group  vs.  Regal Beloit

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.

Regal Beloit

Risk-Adjusted Performance

6 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Regal Beloit are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. In spite of fairly weak basic indicators, Regal Beloit may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Pair Trading with Enerpac Tool and Regal Beloit

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

The idea behind Enerpac Tool Group and Regal Beloit 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 Cryptocurrency Center module to build and monitor diversified portfolio of extremely risky digital assets and cryptocurrency.