Correlation Between Enova International and Roth CH

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

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

Diversification Opportunities for Enova International and Roth CH

0.07

Correlation Coefficient

Enova International  Roth CH

Significant diversification

The 3 months correlation between Enova and Roth is 0.07. Overlapping area represents the amount of risk that can be diversified away by holding Enova International and Roth CH Acquisition in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Roth CH Acquisition and Enova International 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 Enova International are associated (or correlated) with Roth CH. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Roth CH Acquisition has no effect on the direction of Enova International i.e., Enova International and Roth CH go up and down completely randomly.

Pair Corralation between Enova International and Roth CH

Given the investment horizon of 90 days Enova International is expected to generate 0.06 times more return on investment than Roth CH. However, Enova International is 16.27 times less risky than Roth CH. It trades about -0.07 of its potential returns per unit of risk. Roth CH Acquisition is currently generating about -0.58 per unit of risk. If you would invest  10,195  in Enova International on October 10, 2024 and sell it today you would lose (312.00) from holding Enova International or give up 3.06% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Insignificant
Accuracy	15.0%
Values	Daily Returns

Enova International  vs.  Roth CH Acquisition

Enova International

Risk-Adjusted Performance

10 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Enova International are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. Despite somewhat unfluctuating basic indicators, Enova International sustained solid returns over the last few months and may actually be approaching a breakup point.

Roth CH Acquisition

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Roth CH Acquisition has generated negative risk-adjusted returns adding no value to investors with long positions. Despite weak performance in the last few months, the Stock's fundamental indicators remain quite persistent which may send shares a bit higher in February 2025. The latest mess may also be a sign of long-standing up-swing for the company institutional investors.

Pair Trading with Enova International and Roth CH

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

The idea behind Enova International and Roth CH Acquisition 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.