Correlation Between ONCOR and Spectris Plc

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Can any of the company-specific risk be diversified away by investing in both ONCOR and Spectris Plc 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 ONCOR and Spectris Plc into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between ONCOR ELEC DELIVERY and Spectris plc, you can compare the effects of market volatilities on ONCOR and Spectris Plc 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 ONCOR with a short position of Spectris Plc. Check out your portfolio center. Please also check ongoing floating volatility patterns of ONCOR and Spectris Plc.

Diversification Opportunities for ONCOR and Spectris Plc

-0.59
  Correlation Coefficient

Excellent diversification

The 3 months correlation between ONCOR and Spectris is -0.59. Overlapping area represents the amount of risk that can be diversified away by holding ONCOR ELEC DELIVERY and Spectris plc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Spectris plc and ONCOR 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 ONCOR ELEC DELIVERY are associated (or correlated) with Spectris Plc. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Spectris plc has no effect on the direction of ONCOR i.e., ONCOR and Spectris Plc go up and down completely randomly.

Pair Corralation between ONCOR and Spectris Plc

Assuming the 90 days trading horizon ONCOR ELEC DELIVERY is expected to under-perform the Spectris Plc. But the bond apears to be less risky and, when comparing its historical volatility, ONCOR ELEC DELIVERY is 2.75 times less risky than Spectris Plc. The bond trades about -0.01 of its potential returns per unit of risk. The Spectris plc is currently generating about 0.23 of returns per unit of risk over similar time horizon. If you would invest  4,250  in Spectris plc on June 9, 2025 and sell it today you would earn a total of  1,274  from holding Spectris plc or generate 29.98% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Against 
StrengthVery Weak
Accuracy30.16%
ValuesDaily Returns

ONCOR ELEC DELIVERY  vs.  Spectris plc

 Performance 
       Timeline  
ONCOR ELEC DELIVERY 

Risk-Adjusted Performance

Weakest

 
Weak
 
Strong
Over the last 90 days ONCOR ELEC DELIVERY has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong basic indicators, ONCOR is not utilizing all of its potentials. The recent stock price disturbance, may contribute to short-term losses for the investors.
Spectris plc 

Risk-Adjusted Performance

Solid

 
Weak
 
Strong
Compared to the overall equity markets, risk-adjusted returns on investments in Spectris plc are ranked lower than 17 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile forward-looking indicators, Spectris Plc reported solid returns over the last few months and may actually be approaching a breakup point.

ONCOR and Spectris Plc Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with ONCOR and Spectris Plc

The main advantage of trading using opposite ONCOR and Spectris Plc positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if ONCOR position performs unexpectedly, Spectris Plc 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 Spectris Plc will offset losses from the drop in Spectris Plc's long position.
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The idea behind ONCOR ELEC DELIVERY and Spectris plc 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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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 Global Correlations module to find global opportunities by holding instruments from different markets.

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