Correlation Between ESCO Technologies and Energous

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

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

Diversification Opportunities for ESCO Technologies and Energous

-0.68

Correlation Coefficient

ESCO Technologies  Energous

Excellent diversification

The 3 months correlation between ESCO and Energous is -0.68. Overlapping area represents the amount of risk that can be diversified away by holding ESCO Technologies and Energous in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Energous and ESCO Technologies 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 ESCO Technologies are associated (or correlated) with Energous. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Energous has no effect on the direction of ESCO Technologies i.e., ESCO Technologies and Energous go up and down completely randomly.

Pair Corralation between ESCO Technologies and Energous

Considering the 90-day investment horizon ESCO Technologies is expected to generate 0.43 times more return on investment than Energous. However, ESCO Technologies is 2.33 times less risky than Energous. It trades about 0.1 of its potential returns per unit of risk. Energous is currently generating about -0.22 per unit of risk. If you would invest  12,530  in ESCO Technologies on September 19, 2024 and sell it today you would earn a total of  1,253  from holding ESCO Technologies or generate 10.0% return on investment over 90 days.

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

ESCO Technologies  vs.  Energous

ESCO Technologies

Risk-Adjusted Performance

7 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in ESCO Technologies are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. In spite of rather uncertain basic indicators, ESCO Technologies may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Energous

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Energous has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of weak performance in the last few months, the Stock's basic indicators remain comparatively stable which may send shares a bit higher in January 2025. The newest uproar may also be a sign of mid-term up-swing for the firm private investors.

Pair Trading with ESCO Technologies and Energous

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

The idea behind ESCO Technologies and Energous 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 Portfolio Anywhere module to track or share privately all of your investments from the convenience of any device.