Correlation Between Energisa and Trend Etf

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

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

Diversification Opportunities for Energisa and Trend Etf

-0.76

Correlation Coefficient

Energisa  Trend Etf

Pay attention - limited upside

The 3 months correlation between Energisa and Trend is -0.76. Overlapping area represents the amount of risk that can be diversified away by holding Energisa SA and Trend Etf Lbma in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Trend Etf Lbma 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 Trend Etf. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Trend Etf Lbma has no effect on the direction of Energisa i.e., Energisa and Trend Etf go up and down completely randomly.

Pair Corralation between Energisa and Trend Etf

Assuming the 90 days trading horizon Energisa SA is expected to under-perform the Trend Etf. In addition to that, Energisa is 1.42 times more volatile than Trend Etf Lbma. It trades about -0.07 of its total potential returns per unit of risk. Trend Etf Lbma is currently generating about 0.19 per unit of volatility. If you would invest  1,045  in Trend Etf Lbma on October 22, 2024 and sell it today you would earn a total of  675.00  from holding Trend Etf Lbma or generate 64.59% return on investment over 90 days.

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

Energisa SA  vs.  Trend Etf Lbma

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 uncertain 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.

Trend Etf Lbma

Risk-Adjusted Performance

5 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Trend Etf Lbma are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. Despite somewhat strong essential indicators, Trend Etf is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Energisa and Trend Etf

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

The idea behind Energisa SA and Trend Etf Lbma 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 Comparator module to compare the composition, asset allocations and performance of any two portfolios in your account.