Correlation Between Energisa and Corteva

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

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

Diversification Opportunities for Energisa and Corteva

-0.46

Correlation Coefficient

Energisa  Corteva

Very good diversification

The 3 months correlation between Energisa and Corteva is -0.46. Overlapping area represents the amount of risk that can be diversified away by holding Energisa SA and Corteva in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Corteva 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 Corteva. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Corteva has no effect on the direction of Energisa i.e., Energisa and Corteva go up and down completely randomly.

Pair Corralation between Energisa and Corteva

Assuming the 90 days trading horizon Energisa SA is expected to under-perform the Corteva. In addition to that, Energisa is 1.07 times more volatile than Corteva. It trades about -0.15 of its total potential returns per unit of risk. Corteva is currently generating about 0.12 per unit of volatility. If you would invest  8,385  in Corteva on October 21, 2024 and sell it today you would earn a total of  1,053  from holding Corteva or generate 12.56% return on investment over 90 days.

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

Energisa SA  vs.  Corteva

Energisa SA

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Energisa SA has generated negative risk-adjusted returns adding no value to investors with long positions. Despite weak performance in the last few months, the Stock's technical and fundamental indicators remain somewhat strong which may send shares a bit higher in February 2025. The current disturbance may also be a sign of long term up-swing for the company investors.

Corteva

Risk-Adjusted Performance

9 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Corteva are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Corteva sustained solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Energisa and Corteva

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

The idea behind Energisa SA and Corteva 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 Commodity Channel module to use Commodity Channel Index to analyze current equity momentum.