Correlation Between ESS Tech and Enovix Corp
Can any of the company-specific risk be diversified away by investing in both ESS Tech and Enovix 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 ESS Tech and Enovix Corp into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between ESS Tech and Enovix Corp, you can compare the effects of market volatilities on ESS Tech and Enovix 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 ESS Tech with a short position of Enovix Corp. Check out your portfolio center. Please also check ongoing floating volatility patterns of ESS Tech and Enovix Corp.
Diversification Opportunities for ESS Tech and Enovix Corp
-0.09 | Correlation Coefficient |
Good diversification
The 3 months correlation between ESS and Enovix is -0.09. Overlapping area represents the amount of risk that can be diversified away by holding ESS Tech and Enovix Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Enovix Corp and ESS Tech 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 ESS Tech are associated (or correlated) with Enovix Corp. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Enovix Corp has no effect on the direction of ESS Tech i.e., ESS Tech and Enovix Corp go up and down completely randomly.
Pair Corralation between ESS Tech and Enovix Corp
Considering the 90-day investment horizon ESS Tech is expected to under-perform the Enovix Corp. But the stock apears to be less risky and, when comparing its historical volatility, ESS Tech is 1.57 times less risky than Enovix Corp. The stock trades about -0.1 of its potential returns per unit of risk. The Enovix Corp is currently generating about 0.05 of returns per unit of risk over similar time horizon. If you would invest 1,211 in Enovix Corp on November 2, 2024 and sell it today you would earn a total of 27.00 from holding Enovix Corp or generate 2.23% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
ESS Tech vs. Enovix Corp
Performance |
| Timeline |
| ESS Tech |
| Enovix Corp |
ESS Tech and Enovix Corp Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with ESS Tech and Enovix Corp
The main advantage of trading using opposite ESS Tech and Enovix Corp positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if ESS Tech position performs unexpectedly, Enovix 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 Enovix Corp will offset losses from the drop in Enovix Corp's long position.| ESS Tech vs. Fluence Energy | ESS Tech vs. Solid Power | ESS Tech vs. Eos Energy Enterprises | ESS Tech vs. FREYR Battery SA |
| Enovix Corp vs. ESS Tech | Enovix Corp vs. FREYR Battery SA | Enovix Corp vs. Microvast Holdings | Enovix Corp vs. Eos Energy Enterprises |
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 Positions Ratings module to determine portfolio positions ratings based on digital equity recommendations. Macroaxis instant position ratings are based on combination of fundamental analysis and risk-adjusted market performance.
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