Correlation Between Enlight Renewable and Topbuild Corp

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Can any of the company-specific risk be diversified away by investing in both Enlight Renewable and Topbuild 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 Enlight Renewable and Topbuild Corp into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Enlight Renewable Energy and Topbuild Corp, you can compare the effects of market volatilities on Enlight Renewable and Topbuild 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 Enlight Renewable with a short position of Topbuild Corp. Check out your portfolio center. Please also check ongoing floating volatility patterns of Enlight Renewable and Topbuild Corp.

Diversification Opportunities for Enlight Renewable and Topbuild Corp

EnlightTopbuildDiversified AwayEnlightTopbuildDiversified Away100%
-0.44
  Correlation Coefficient

Very good diversification

The 3 months correlation between Enlight and Topbuild is -0.44. Overlapping area represents the amount of risk that can be diversified away by holding Enlight Renewable Energy and Topbuild Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Topbuild Corp and Enlight Renewable 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 Enlight Renewable Energy are associated (or correlated) with Topbuild Corp. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Topbuild Corp has no effect on the direction of Enlight Renewable i.e., Enlight Renewable and Topbuild Corp go up and down completely randomly.

Pair Corralation between Enlight Renewable and Topbuild Corp

Given the investment horizon of 90 days Enlight Renewable Energy is expected to generate 1.16 times more return on investment than Topbuild Corp. However, Enlight Renewable is 1.16 times more volatile than Topbuild Corp. It trades about 0.16 of its potential returns per unit of risk. Topbuild Corp is currently generating about -0.25 per unit of risk. If you would invest  1,611  in Enlight Renewable Energy on November 27, 2024 and sell it today you would earn a total of  134.00  from holding Enlight Renewable Energy or generate 8.32% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Against 
StrengthVery Weak
Accuracy100.0%
ValuesDaily Returns

Enlight Renewable Energy  vs.  Topbuild Corp

 Performance 
JavaScript chart by amCharts 3.21.15Dec2025Feb -10-5051015
JavaScript chart by amCharts 3.21.15ENLT BLD
       Timeline  
Enlight Renewable Energy 

Risk-Adjusted Performance

Insignificant

 
Weak
 
Strong
Compared to the overall equity markets, risk-adjusted returns on investments in Enlight Renewable Energy are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively unsteady essential indicators, Enlight Renewable may actually be approaching a critical reversion point that can send shares even higher in March 2025.
JavaScript chart by amCharts 3.21.15DecJanFebJanFeb15.51616.51717.518
Topbuild Corp 

Risk-Adjusted Performance

Very Weak

 
Weak
 
Strong
Over the last 90 days Topbuild Corp has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fragile performance in the last few months, the Stock's essential indicators remain rather sound which may send shares a bit higher in March 2025. The latest tumult may also be a sign of longer-term up-swing for the firm shareholders.
JavaScript chart by amCharts 3.21.15DecJanFebJanFeb300320340360380400

Enlight Renewable and Topbuild Corp Volatility Contrast

   Predicted Return Density   
JavaScript chart by amCharts 3.21.15-7.41-5.55-3.69-1.830.01.833.735.637.529.42 0.020.030.040.050.060.07
JavaScript chart by amCharts 3.21.15ENLT BLD
       Returns  

Pair Trading with Enlight Renewable and Topbuild Corp

The main advantage of trading using opposite Enlight Renewable and Topbuild Corp positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Enlight Renewable position performs unexpectedly, Topbuild 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 Topbuild Corp will offset losses from the drop in Topbuild Corp's long position.
The idea behind Enlight Renewable Energy and Topbuild 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.
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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 ETFs module to find actively traded Exchange Traded Funds (ETF) from around the world.

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