Correlation Between Enstar Group and Assicurazioni Generali

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

By analyzing existing cross correlation between Enstar Group Limited and Assicurazioni Generali SpA, you can compare the effects of market volatilities on Enstar Group and Assicurazioni Generali 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 Enstar Group with a short position of Assicurazioni Generali. Check out your portfolio center. Please also check ongoing floating volatility patterns of Enstar Group and Assicurazioni Generali.

Diversification Opportunities for Enstar Group and Assicurazioni Generali

0.12

Correlation Coefficient

Enstar Group  Assicurazioni Generali

Average diversification

The 3 months correlation between Enstar and Assicurazioni is 0.12. Overlapping area represents the amount of risk that can be diversified away by holding Enstar Group Limited and Assicurazioni Generali SpA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Assicurazioni Generali and Enstar Group 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 Enstar Group Limited are associated (or correlated) with Assicurazioni Generali. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Assicurazioni Generali has no effect on the direction of Enstar Group i.e., Enstar Group and Assicurazioni Generali go up and down completely randomly.

Pair Corralation between Enstar Group and Assicurazioni Generali

Given the investment horizon of 90 days Enstar Group Limited is expected to under-perform the Assicurazioni Generali. But the stock apears to be less risky and, when comparing its historical volatility, Enstar Group Limited is 4.67 times less risky than Assicurazioni Generali. The stock trades about -0.14 of its potential returns per unit of risk. The Assicurazioni Generali SpA is currently generating about 0.0 of returns per unit of risk over similar time horizon. If you would invest  1,412  in Assicurazioni Generali SpA on September 22, 2024 and sell it today you would lose (1.00) from holding Assicurazioni Generali SpA or give up 0.07% of portfolio value over 90 days.

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

Enstar Group Limited  vs.  Assicurazioni Generali SpA

Enstar Group Limited

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Enstar Group Limited are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. Even with relatively invariable technical and fundamental indicators, Enstar Group is not utilizing all of its potentials. The latest stock price agitation, may contribute to short-term losses for the retail investors.

Assicurazioni Generali

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Assicurazioni Generali SpA has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly strong technical and fundamental indicators, Assicurazioni Generali is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Enstar Group and Assicurazioni Generali

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

The idea behind Enstar Group Limited and Assicurazioni Generali SpA 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 Equity Forecasting module to use basic forecasting models to generate price predictions and determine price momentum.