Correlation Between ESAB Corp and Northwest Pipe
Can any of the company-specific risk be diversified away by investing in both ESAB Corp and Northwest Pipe 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 ESAB Corp and Northwest Pipe into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between ESAB Corp and Northwest Pipe, you can compare the effects of market volatilities on ESAB Corp and Northwest Pipe 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 ESAB Corp with a short position of Northwest Pipe. Check out your portfolio center. Please also check ongoing floating volatility patterns of ESAB Corp and Northwest Pipe.
Diversification Opportunities for ESAB Corp and Northwest Pipe
-0.65 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between ESAB and Northwest is -0.65. Overlapping area represents the amount of risk that can be diversified away by holding ESAB Corp and Northwest Pipe in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Northwest Pipe and ESAB Corp 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 ESAB Corp are associated (or correlated) with Northwest Pipe. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Northwest Pipe has no effect on the direction of ESAB Corp i.e., ESAB Corp and Northwest Pipe go up and down completely randomly.
Pair Corralation between ESAB Corp and Northwest Pipe
Given the investment horizon of 90 days ESAB Corp is expected to under-perform the Northwest Pipe. In addition to that, ESAB Corp is 1.22 times more volatile than Northwest Pipe. It trades about -0.03 of its total potential returns per unit of risk. Northwest Pipe is currently generating about 0.2 per unit of volatility. If you would invest 3,950 in Northwest Pipe on June 9, 2025 and sell it today you would earn a total of 1,266 from holding Northwest Pipe or generate 32.05% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
ESAB Corp vs. Northwest Pipe
Performance |
| Timeline |
| ESAB Corp |
| Northwest Pipe |
ESAB Corp and Northwest Pipe Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with ESAB Corp and Northwest Pipe
The main advantage of trading using opposite ESAB Corp and Northwest Pipe positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if ESAB Corp position performs unexpectedly, Northwest Pipe 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 Northwest Pipe will offset losses from the drop in Northwest Pipe's long position.| ESAB Corp vs. Insteel Industries | ESAB Corp vs. Carpenter Technology | ESAB Corp vs. Mueller Industries | ESAB Corp vs. Northwest Pipe |
| Northwest Pipe vs. Insteel Industries | Northwest Pipe vs. Mayville Engineering Co | Northwest Pipe vs. Gulf Island Fabrication | Northwest Pipe vs. ESAB Corp |
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 Aroon Oscillator module to analyze current equity momentum using Aroon Oscillator and other momentum ratios.
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