Correlation Between Everest and Enstar Group

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

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

Diversification Opportunities for Everest and Enstar Group

-0.13

Correlation Coefficient

Everest  Enstar Group

Good diversification

The 3 months correlation between Everest and Enstar is -0.13. Overlapping area represents the amount of risk that can be diversified away by holding Everest Group and Enstar Group Ltd in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Enstar Group and Everest 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 Everest Group are associated (or correlated) with Enstar Group. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Enstar Group has no effect on the direction of Everest i.e., Everest and Enstar Group go up and down completely randomly.

Pair Corralation between Everest and Enstar Group

Allowing for the 90-day total investment horizon Everest Group is expected to under-perform the Enstar Group. In addition to that, Everest is 1.21 times more volatile than Enstar Group Ltd. It trades about -0.34 of its total potential returns per unit of risk. Enstar Group Ltd is currently generating about 0.1 per unit of volatility. If you would invest  2,035  in Enstar Group Ltd on November 19, 2024 and sell it today you would earn a total of  43.00  from holding Enstar Group Ltd or generate 2.11% return on investment over 90 days.

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

Everest Group  vs.  Enstar Group Ltd

Everest Group

Risk-Adjusted Performance

Very Weak

Over the last 90 days Everest Group has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest fragile performance, the Stock's technical and fundamental indicators remain stable and the current disturbance on Wall Street may also be a sign of long-run gains for the company stockholders.

Enstar Group

Risk-Adjusted Performance

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Enstar Group Ltd are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. Even with relatively weak basic indicators, Enstar Group may actually be approaching a critical reversion point that can send shares even higher in March 2025.

Pair Trading with Everest and Enstar Group

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

The idea behind Everest Group and Enstar Group Ltd 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.

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 Crypto Correlations module to use cryptocurrency correlation module to diversify your cryptocurrency portfolio across multiple coins.