Correlation Between Generation Alpha and Enovix Corp

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

By analyzing existing cross correlation between Generation Alpha and Enovix Corp, you can compare the effects of market volatilities on Generation Alpha and Enovix Corp 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 Generation Alpha with a short position of Enovix Corp. Check out your portfolio center. Please also check ongoing floating volatility patterns of Generation Alpha and Enovix Corp.

Diversification Opportunities for Generation Alpha and Enovix Corp

-0.32

Correlation Coefficient

Generation Alpha  Enovix Corp

Very good diversification

The 3 months correlation between Generation and Enovix is -0.32. Overlapping area represents the amount of risk that can be diversified away by holding Generation Alpha and Enovix Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Enovix Corp and Generation Alpha 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 Generation Alpha are associated (or correlated) with Enovix Corp. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Enovix Corp has no effect on the direction of Generation Alpha i.e., Generation Alpha and Enovix Corp go up and down completely randomly.

Pair Corralation between Generation Alpha and Enovix Corp

If you would invest  0.01  in Generation Alpha on December 5, 2024 and sell it today you would earn a total of  0.00  from holding Generation Alpha or generate 0.0% return on investment over 90 days.

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

Generation Alpha  vs.  Enovix Corp

Generation Alpha

Risk-Adjusted Performance

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Generation Alpha are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. Despite quite fragile basic indicators, Generation Alpha disclosed solid returns over the last few months and may actually be approaching a breakup point.

Enovix Corp

Risk-Adjusted Performance

Very Weak

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

Pair Trading with Generation Alpha and Enovix Corp

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

The idea behind Generation Alpha and Enovix Corp 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 Equity Forecasting module to use basic forecasting models to generate price predictions and determine price momentum.