Correlation Between Old Republic and Enlight Renewable

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

By analyzing existing cross correlation between Old Republic International and Enlight Renewable Energy, you can compare the effects of market volatilities on Old Republic and Enlight Renewable 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 Old Republic with a short position of Enlight Renewable. Check out your portfolio center. Please also check ongoing floating volatility patterns of Old Republic and Enlight Renewable.

Diversification Opportunities for Old Republic and Enlight Renewable

0.25

Correlation Coefficient

Old Republic  Enlight Renewable

Modest diversification

The 3 months correlation between Old and Enlight is 0.25. Overlapping area represents the amount of risk that can be diversified away by holding Old Republic International and Enlight Renewable Energy in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Enlight Renewable Energy and Old Republic 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 Old Republic International are associated (or correlated) with Enlight Renewable. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Enlight Renewable Energy has no effect on the direction of Old Republic i.e., Old Republic and Enlight Renewable go up and down completely randomly.

Pair Corralation between Old Republic and Enlight Renewable

Considering the 90-day investment horizon Old Republic International is expected to under-perform the Enlight Renewable. But the stock apears to be less risky and, when comparing its historical volatility, Old Republic International is 1.61 times less risky than Enlight Renewable. The stock trades about -0.08 of its potential returns per unit of risk. The Enlight Renewable Energy is currently generating about -0.04 of returns per unit of risk over similar time horizon. If you would invest  1,623  in Enlight Renewable Energy on September 16, 2024 and sell it today you would lose (28.00) from holding Enlight Renewable Energy or give up 1.73% of portfolio value over 90 days.

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

Old Republic International  vs.  Enlight Renewable Energy

Old Republic Interna

Risk-Adjusted Performance

4 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Old Republic International are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. Despite fairly strong basic indicators, Old Republic is not utilizing all of its potentials. The current stock price confusion, may contribute to short-horizon losses for the traders.

Enlight Renewable Energy

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Enlight Renewable Energy are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively stable essential indicators, Enlight Renewable is not utilizing all of its potentials. The recent stock price uproar, may contribute to short-horizon losses for the private investors.

Pair Trading with Old Republic and Enlight Renewable

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

The idea behind Old Republic International and Enlight Renewable Energy 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 Performance Analysis module to check effects of mean-variance optimization against your current asset allocation.