Correlation Between Enstar Group and Fidelis Insurance

Can any of the company-specific risk be diversified away by investing in both Enstar Group and Fidelis Insurance 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 Fidelis Insurance 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 Fidelis Insurance Holdings, you can compare the effects of market volatilities on Enstar Group and Fidelis Insurance 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 Fidelis Insurance. Check out your portfolio center. Please also check ongoing floating volatility patterns of Enstar Group and Fidelis Insurance.

Diversification Opportunities for Enstar Group and Fidelis Insurance

0.36

Correlation Coefficient

Enstar Group  Fidelis Insurance

Weak diversification

The 3 months correlation between Enstar and Fidelis is 0.36. Overlapping area represents the amount of risk that can be diversified away by holding Enstar Group Limited and Fidelis Insurance Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Fidelis Insurance 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 Fidelis Insurance. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Fidelis Insurance has no effect on the direction of Enstar Group i.e., Enstar Group and Fidelis Insurance go up and down completely randomly.

Pair Corralation between Enstar Group and Fidelis Insurance

Given the investment horizon of 90 days Enstar Group Limited is expected to under-perform the Fidelis Insurance. But the stock apears to be less risky and, when comparing its historical volatility, Enstar Group Limited is 5.8 times less risky than Fidelis Insurance. The stock trades about -0.01 of its potential returns per unit of risk. The Fidelis Insurance Holdings is currently generating about 0.09 of returns per unit of risk over similar time horizon. If you would invest  1,841  in Fidelis Insurance Holdings on August 30, 2024 and sell it today you would earn a total of  225.00  from holding Fidelis Insurance Holdings or generate 12.22% return on investment over 90 days.

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

Enstar Group Limited  vs.  Fidelis Insurance Holdings

Enstar Group Limited

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Enstar Group Limited has generated negative risk-adjusted returns adding no value to investors with long positions. Even with relatively invariable technical and fundamental indicators, Enstar Group is not utilizing all of its potentials. The recent stock price agitation, may contribute to short-term losses for the retail investors.

Fidelis Insurance

Risk-Adjusted Performance

7 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Fidelis Insurance Holdings are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. Despite quite weak technical indicators, Fidelis Insurance disclosed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Enstar Group and Fidelis Insurance

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

The idea behind Enstar Group Limited and Fidelis Insurance 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 Idea Optimizer module to use advanced portfolio builder with pre-computed micro ideas to build optimal portfolio .