Correlation Between Enersys and 78409VAM6

Can any of the company-specific risk be diversified away by investing in both Enersys and 78409VAM6 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 78409VAM6 into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Enersys and SP GLOBAL INC, you can compare the effects of market volatilities on Enersys and 78409VAM6 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 78409VAM6. Check out your portfolio center. Please also check ongoing floating volatility patterns of Enersys and 78409VAM6.

Diversification Opportunities for Enersys and 78409VAM6

0.66

Correlation Coefficient

Enersys  78409VAM6

Poor diversification

The 3 months correlation between Enersys and 78409VAM6 is 0.66. Overlapping area represents the amount of risk that can be diversified away by holding Enersys and SP GLOBAL INC in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on SP GLOBAL INC 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 78409VAM6. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of SP GLOBAL INC has no effect on the direction of Enersys i.e., Enersys and 78409VAM6 go up and down completely randomly.

Pair Corralation between Enersys and 78409VAM6

Considering the 90-day investment horizon Enersys is expected to under-perform the 78409VAM6. In addition to that, Enersys is 10.32 times more volatile than SP GLOBAL INC. It trades about -0.11 of its total potential returns per unit of risk. SP GLOBAL INC is currently generating about -0.2 per unit of volatility. If you would invest  9,674  in SP GLOBAL INC on September 27, 2024 and sell it today you would lose (46.00) from holding SP GLOBAL INC or give up 0.48% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	90.91%
Values	Daily Returns

Enersys  vs.  SP GLOBAL INC

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.

SP GLOBAL INC

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days SP GLOBAL INC has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong basic indicators, 78409VAM6 is not utilizing all of its potentials. The newest stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Enersys and 78409VAM6

The main advantage of trading using opposite Enersys and 78409VAM6 positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Enersys position performs unexpectedly, 78409VAM6 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 78409VAM6 will offset losses from the drop in 78409VAM6's long position.

The idea behind Enersys and SP GLOBAL INC 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.

Check out your portfolio center.

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 Premium Stories module to follow Macroaxis premium stories from verified contributors across different equity types, categories and coverage scope.