Correlation Between STRYKER and Enlight Renewable

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

By analyzing existing cross correlation between STRYKER P 365 and Enlight Renewable Energy, you can compare the effects of market volatilities on STRYKER 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 STRYKER with a short position of Enlight Renewable. Check out your portfolio center. Please also check ongoing floating volatility patterns of STRYKER and Enlight Renewable.

Diversification Opportunities for STRYKER and Enlight Renewable

-0.47

Correlation Coefficient

STRYKER  Enlight Renewable

Very good diversification

The 3 months correlation between STRYKER and Enlight is -0.47. Overlapping area represents the amount of risk that can be diversified away by holding STRYKER P 365 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 STRYKER 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 STRYKER P 365 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 STRYKER i.e., STRYKER and Enlight Renewable go up and down completely randomly.

Pair Corralation between STRYKER and Enlight Renewable

Assuming the 90 days trading horizon STRYKER P 365 is expected to under-perform the Enlight Renewable. But the bond apears to be less risky and, when comparing its historical volatility, STRYKER P 365 is 3.12 times less risky than Enlight Renewable. The bond trades about -0.1 of its potential returns per unit of risk. The Enlight Renewable Energy is currently generating about 0.06 of returns per unit of risk over similar time horizon. If you would invest  1,644  in Enlight Renewable Energy on October 15, 2024 and sell it today you would earn a total of  32.00  from holding Enlight Renewable Energy or generate 1.95% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	90.0%
Values	Daily Returns

STRYKER P 365  vs.  Enlight Renewable Energy

STRYKER P 365

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days STRYKER P 365 has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong basic indicators, STRYKER is not utilizing all of its potentials. The latest stock price disturbance, may contribute to short-term losses for the investors.

Enlight Renewable Energy

Risk-Adjusted Performance

4 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Enlight Renewable Energy are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively weak essential indicators, Enlight Renewable may actually be approaching a critical reversion point that can send shares even higher in February 2025.

Pair Trading with STRYKER and Enlight Renewable

The main advantage of trading using opposite STRYKER and Enlight Renewable positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if STRYKER 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 STRYKER P 365 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 Financial Widgets module to easily integrated Macroaxis content with over 30 different plug-and-play financial widgets.