Correlation Between Eneva SA and Wetzel SA

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

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

Diversification Opportunities for Eneva SA and Wetzel SA

-0.1

Correlation Coefficient

Eneva SA  Wetzel SA

Good diversification

The 3 months correlation between Eneva and Wetzel is -0.1. Overlapping area represents the amount of risk that can be diversified away by holding Eneva SA and Wetzel SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Wetzel SA and Eneva SA 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 Eneva SA are associated (or correlated) with Wetzel SA. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Wetzel SA has no effect on the direction of Eneva SA i.e., Eneva SA and Wetzel SA go up and down completely randomly.

Pair Corralation between Eneva SA and Wetzel SA

Assuming the 90 days trading horizon Eneva SA is expected to generate 0.56 times more return on investment than Wetzel SA. However, Eneva SA is 1.77 times less risky than Wetzel SA. It trades about 0.04 of its potential returns per unit of risk. Wetzel SA is currently generating about -0.11 per unit of risk. If you would invest  1,177  in Eneva SA on November 27, 2024 and sell it today you would earn a total of  44.00  from holding Eneva SA or generate 3.74% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	98.36%
Values	Daily Returns

Eneva SA  vs.  Wetzel SA

Eneva SA

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Eneva SA are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively stable basic indicators, Eneva SA is not utilizing all of its potentials. The current stock price uproar, may contribute to short-horizon losses for the private investors.

Wetzel SA

Risk-Adjusted Performance

Very Weak

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

Pair Trading with Eneva SA and Wetzel SA

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

The idea behind Eneva SA and Wetzel SA 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 File Import module to quickly import all of your third-party portfolios from your local drive in csv format.