Correlation Between Enersys and ICC Holdings

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

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

Diversification Opportunities for Enersys and ICC Holdings

-0.67

Correlation Coefficient

Enersys  ICC Holdings

Excellent diversification

The 3 months correlation between Enersys and ICC is -0.67. Overlapping area represents the amount of risk that can be diversified away by holding Enersys and ICC Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ICC 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 ICC Holdings. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of ICC Holdings has no effect on the direction of Enersys i.e., Enersys and ICC Holdings go up and down completely randomly.

Pair Corralation between Enersys and ICC Holdings

Considering the 90-day investment horizon Enersys is expected to under-perform the ICC Holdings. In addition to that, Enersys is 1.46 times more volatile than ICC Holdings. It trades about -0.15 of its total potential returns per unit of risk. ICC Holdings is currently generating about 0.05 per unit of volatility. If you would invest  2,325  in ICC Holdings on September 27, 2024 and sell it today you would earn a total of  18.00  from holding ICC Holdings or generate 0.77% return on investment over 90 days.

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

Enersys  vs.  ICC 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 latest inconsistent performance, the Stock's basic indicators remain stable and the newest uproar on Wall Street may also be a sign of mid-term gains for the firm private investors.

ICC Holdings

Risk-Adjusted Performance

4 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in ICC Holdings are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. Despite fairly strong fundamental indicators, ICC Holdings is not utilizing all of its potentials. The current stock price confusion, may contribute to short-horizon losses for the traders.

Pair Trading with Enersys and ICC Holdings

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

The idea behind Enersys and ICC 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 Piotroski F Score module to get Piotroski F Score based on the binary analysis strategy of nine different fundamentals.