Correlation Between Diageo PLC and Enersys
Can any of the company-specific risk be diversified away by investing in both Diageo PLC and Enersys 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 Diageo PLC and Enersys into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Diageo PLC ADR and Enersys, you can compare the effects of market volatilities on Diageo PLC and Enersys 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 Diageo PLC with a short position of Enersys. Check out your portfolio center. Please also check ongoing floating volatility patterns of Diageo PLC and Enersys.
Diversification Opportunities for Diageo PLC and Enersys
0.68 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Diageo and Enersys is 0.68. Overlapping area represents the amount of risk that can be diversified away by holding Diageo PLC ADR and Enersys in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Enersys and Diageo PLC 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 Diageo PLC ADR are associated (or correlated) with Enersys. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Enersys has no effect on the direction of Diageo PLC i.e., Diageo PLC and Enersys go up and down completely randomly.
Pair Corralation between Diageo PLC and Enersys
Considering the 90-day investment horizon Diageo PLC ADR is expected to under-perform the Enersys. But the stock apears to be less risky and, when comparing its historical volatility, Diageo PLC ADR is 1.07 times less risky than Enersys. The stock trades about -0.04 of its potential returns per unit of risk. The Enersys is currently generating about -0.01 of returns per unit of risk over similar time horizon. If you would invest 9,764 in Enersys on September 12, 2024 and sell it today you would lose (221.00) from holding Enersys or give up 2.26% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Diageo PLC ADR vs. Enersys
Performance |
| Timeline |
| Diageo PLC ADR |
| Enersys |
Diageo PLC and Enersys Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Diageo PLC and Enersys
The main advantage of trading using opposite Diageo PLC and Enersys positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Diageo PLC position performs unexpectedly, Enersys 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 Enersys will offset losses from the drop in Enersys' long position.| Diageo PLC vs. Brown Forman | Diageo PLC vs. MGP Ingredients | Diageo PLC vs. Duckhorn Portfolio | Diageo PLC vs. Brown Forman |
| Enersys vs. Advanced Energy Industries | Enersys vs. Hubbell | Enersys vs. Acuity Brands | Enersys vs. Kimball Electronics |
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 Idea Analyzer module to analyze all characteristics, volatility and risk-adjusted return of Macroaxis ideas.
Other Complementary Tools
| Global Markets Map Get a quick overview of global market snapshot using zoomable world map. Drill down to check world indexes | |
| Fundamental Analysis View fundamental data based on most recent published financial statements | |
| Stocks Directory Find actively traded stocks across global markets | |
| Portfolio Optimization Compute new portfolio that will generate highest expected return given your specified tolerance for risk | |
| ETF Categories List of ETF categories grouped based on various criteria, such as the investment strategy or type of investments |