Correlation Between Energisa and IShares IShares

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

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

Diversification Opportunities for Energisa and IShares IShares

-0.6

Correlation Coefficient

Energisa  IShares IShares

Excellent diversification

The 3 months correlation between Energisa and IShares is -0.6. Overlapping area represents the amount of risk that can be diversified away by holding Energisa SA and iShares iShares in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on iShares iShares and Energisa 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 Energisa SA are associated (or correlated) with IShares IShares. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of iShares iShares has no effect on the direction of Energisa i.e., Energisa and IShares IShares go up and down completely randomly.

Pair Corralation between Energisa and IShares IShares

Assuming the 90 days trading horizon Energisa SA is expected to generate 1.84 times more return on investment than IShares IShares. However, Energisa is 1.84 times more volatile than iShares iShares. It trades about 0.1 of its potential returns per unit of risk. iShares iShares is currently generating about -0.11 per unit of risk. If you would invest  3,719  in Energisa SA on December 25, 2024 and sell it today you would earn a total of  401.00  from holding Energisa SA or generate 10.78% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Weak
Accuracy	98.33%
Values	Daily Returns

Energisa SA  vs.  iShares iShares

Energisa SA

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Energisa SA are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. Despite somewhat uncertain technical and fundamental indicators, Energisa may actually be approaching a critical reversion point that can send shares even higher in April 2025.

iShares iShares

Risk-Adjusted Performance

Very Weak

Over the last 90 days iShares iShares has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest weak performance, the Etf's basic indicators remain strong and the current disturbance on Wall Street may also be a sign of long term gains for the ETF investors.

Pair Trading with Energisa and IShares IShares

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

The idea behind Energisa SA and iShares iShares 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 Aroon Oscillator module to analyze current equity momentum using Aroon Oscillator and other momentum ratios.