Correlation Between Enersys and Hayward Holdings

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

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

Diversification Opportunities for Enersys and Hayward Holdings

-0.22

Correlation Coefficient

Enersys  Hayward Holdings

Very good diversification

The 3 months correlation between Enersys and Hayward is -0.22. Overlapping area represents the amount of risk that can be diversified away by holding Enersys and Hayward Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Hayward Holdings and Enersys 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 Enersys are associated (or correlated) with Hayward Holdings. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Hayward Holdings has no effect on the direction of Enersys i.e., Enersys and Hayward Holdings go up and down completely randomly.

Pair Corralation between Enersys and Hayward Holdings

Considering the 90-day investment horizon Enersys is expected to under-perform the Hayward Holdings. But the stock apears to be less risky and, when comparing its historical volatility, Enersys is 1.13 times less risky than Hayward Holdings. The stock trades about -0.01 of its potential returns per unit of risk. The Hayward Holdings is currently generating about 0.13 of returns per unit of risk over similar time horizon. If you would invest  1,418  in Hayward Holdings on September 2, 2024 and sell it today you would earn a total of  198.00  from holding Hayward Holdings or generate 13.96% return on investment over 90 days.

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

Enersys  vs.  Hayward Holdings

Enersys

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Enersys has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively stable basic indicators, Enersys is not utilizing all of its potentials. The newest stock price uproar, may contribute to short-horizon losses for the private investors.

Hayward Holdings

Risk-Adjusted Performance

9 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Hayward Holdings are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. In spite of fairly unsteady basic indicators, Hayward Holdings showed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Enersys and Hayward Holdings

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

The idea behind Enersys and Hayward Holdings 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 Anywhere module to track or share privately all of your investments from the convenience of any device.