Correlation Between Enovix Corp and Legrand SA
Can any of the company-specific risk be diversified away by investing in both Enovix Corp and Legrand SA 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 Enovix Corp and Legrand SA into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Enovix Corp and Legrand SA ADR, you can compare the effects of market volatilities on Enovix Corp and Legrand SA 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 Enovix Corp with a short position of Legrand SA. Check out your portfolio center. Please also check ongoing floating volatility patterns of Enovix Corp and Legrand SA.
Diversification Opportunities for Enovix Corp and Legrand SA
0.31 | Correlation Coefficient |
Weak diversification
The 3 months correlation between Enovix and Legrand is 0.31. Overlapping area represents the amount of risk that can be diversified away by holding Enovix Corp and Legrand SA ADR in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Legrand SA ADR and Enovix Corp 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 Enovix Corp are associated (or correlated) with Legrand SA. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Legrand SA ADR has no effect on the direction of Enovix Corp i.e., Enovix Corp and Legrand SA go up and down completely randomly.
Pair Corralation between Enovix Corp and Legrand SA
Given the investment horizon of 90 days Enovix Corp is expected to generate 3.88 times more return on investment than Legrand SA. However, Enovix Corp is 3.88 times more volatile than Legrand SA ADR. It trades about 0.02 of its potential returns per unit of risk. Legrand SA ADR is currently generating about -0.09 per unit of risk. If you would invest 981.00 in Enovix Corp on August 28, 2024 and sell it today you would lose (28.00) from holding Enovix Corp or give up 2.85% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Enovix Corp vs. Legrand SA ADR
Performance |
| Timeline |
| Enovix Corp |
| Legrand SA ADR |
Enovix Corp and Legrand SA Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Enovix Corp and Legrand SA
The main advantage of trading using opposite Enovix Corp and Legrand SA positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Enovix Corp position performs unexpectedly, Legrand SA 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 Legrand SA will offset losses from the drop in Legrand SA's long position.| Enovix Corp vs. Bloom Energy Corp | Enovix Corp vs. Eos Energy Enterprises | Enovix Corp vs. Sunrise New Energy | Enovix Corp vs. GrafTech International |
| Legrand SA vs. FREYR Battery SA | Legrand SA vs. nVent Electric PLC | Legrand SA vs. Hubbell | Legrand SA vs. Advanced Energy Industries |
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 Technical Analysis module to check basic technical indicators and analysis based on most latest market data.
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