Correlation Between Enlight Renewable and BrightSpring Health

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

By analyzing existing cross correlation between Enlight Renewable Energy and BrightSpring Health Services,, you can compare the effects of market volatilities on Enlight Renewable and BrightSpring Health 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 Enlight Renewable with a short position of BrightSpring Health. Check out your portfolio center. Please also check ongoing floating volatility patterns of Enlight Renewable and BrightSpring Health.

Diversification Opportunities for Enlight Renewable and BrightSpring Health

-0.02

Correlation Coefficient

Enlight Renewable  BrightSpring Health

Good diversification

The 3 months correlation between Enlight and BrightSpring is -0.02. Overlapping area represents the amount of risk that can be diversified away by holding Enlight Renewable Energy and BrightSpring Health Services, in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on BrightSpring Health and Enlight Renewable 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 Enlight Renewable Energy are associated (or correlated) with BrightSpring Health. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of BrightSpring Health has no effect on the direction of Enlight Renewable i.e., Enlight Renewable and BrightSpring Health go up and down completely randomly.

Pair Corralation between Enlight Renewable and BrightSpring Health

Given the investment horizon of 90 days Enlight Renewable Energy is expected to under-perform the BrightSpring Health. But the stock apears to be less risky and, when comparing its historical volatility, Enlight Renewable Energy is 1.31 times less risky than BrightSpring Health. The stock trades about -0.19 of its potential returns per unit of risk. The BrightSpring Health Services, is currently generating about 0.38 of returns per unit of risk over similar time horizon. If you would invest  6,414  in BrightSpring Health Services, on October 26, 2024 and sell it today you would earn a total of  1,271  from holding BrightSpring Health Services, or generate 19.82% return on investment over 90 days.

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

Enlight Renewable Energy  vs.  BrightSpring Health Services,

Enlight Renewable Energy

Risk-Adjusted Performance

2 of 100

Insignificant

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

BrightSpring Health

Risk-Adjusted Performance

14 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in BrightSpring Health Services, are ranked lower than 14 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively uncertain technical and fundamental indicators, BrightSpring Health unveiled solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Enlight Renewable and BrightSpring Health

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

The idea behind Enlight Renewable Energy and BrightSpring Health Services, 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 Global Markets Map module to get a quick overview of global market snapshot using zoomable world map. Drill down to check world indexes.