Correlation Between Group 1 and Enlight Renewable
Can any of the company-specific risk be diversified away by investing in both Group 1 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 Group 1 and Enlight Renewable into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Group 1 Automotive and Enlight Renewable Energy, you can compare the effects of market volatilities on Group 1 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 Group 1 with a short position of Enlight Renewable. Check out your portfolio center. Please also check ongoing floating volatility patterns of Group 1 and Enlight Renewable.
Diversification Opportunities for Group 1 and Enlight Renewable
0.41 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Group and Enlight is 0.41. Overlapping area represents the amount of risk that can be diversified away by holding Group 1 Automotive 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 Group 1 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 Group 1 Automotive 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 Group 1 i.e., Group 1 and Enlight Renewable go up and down completely randomly.
Pair Corralation between Group 1 and Enlight Renewable
Considering the 90-day investment horizon Group 1 Automotive is expected to generate 0.81 times more return on investment than Enlight Renewable. However, Group 1 Automotive is 1.23 times less risky than Enlight Renewable. It trades about 0.08 of its potential returns per unit of risk. Enlight Renewable Energy is currently generating about -0.01 per unit of risk. If you would invest 29,836 in Group 1 Automotive on October 16, 2024 and sell it today you would earn a total of 12,992 from holding Group 1 Automotive or generate 43.54% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Group 1 Automotive vs. Enlight Renewable Energy
Performance |
| Timeline |
| Group 1 Automotive |
| Enlight Renewable Energy |
Group 1 and Enlight Renewable Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Group 1 and Enlight Renewable
The main advantage of trading using opposite Group 1 and Enlight Renewable positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Group 1 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.| Group 1 vs. Leslies | Group 1 vs. Sally Beauty Holdings | Group 1 vs. ODP Corp | Group 1 vs. 1 800 FLOWERSCOM |
| Enlight Renewable vs. Weibo Corp | Enlight Renewable vs. Pinterest | Enlight Renewable vs. Nasdaq Inc | Enlight Renewable vs. NetSol Technologies |
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 Stock Screener module to find equities using a custom stock filter or screen asymmetry in trading patterns, price, volume, or investment outlook..
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