Correlation Between Encore Wire and Enersys
Can any of the company-specific risk be diversified away by investing in both Encore Wire 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 Encore Wire and Enersys into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Encore Wire and Enersys, you can compare the effects of market volatilities on Encore Wire 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 Encore Wire with a short position of Enersys. Check out your portfolio center. Please also check ongoing floating volatility patterns of Encore Wire and Enersys.
Diversification Opportunities for Encore Wire and Enersys
-0.12 | Correlation Coefficient |
Good diversification
The 3 months correlation between Encore and Enersys is -0.12. Overlapping area represents the amount of risk that can be diversified away by holding Encore Wire and Enersys in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Enersys and Encore Wire 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 Encore Wire 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 Encore Wire i.e., Encore Wire and Enersys go up and down completely randomly.
Pair Corralation between Encore Wire and Enersys
Given the investment horizon of 90 days Encore Wire is expected to generate 0.44 times more return on investment than Enersys. However, Encore Wire is 2.28 times less risky than Enersys. It trades about 0.22 of its potential returns per unit of risk. Enersys is currently generating about -0.05 per unit of risk. If you would invest 27,787 in Encore Wire on August 24, 2024 and sell it today you would earn a total of 1,197 from holding Encore Wire or generate 4.31% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 20.8% |
| Values | Daily Returns |
Encore Wire vs. Enersys
Performance |
| Timeline |
| Encore Wire |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Very Weak
| Enersys |
Encore Wire and Enersys Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Encore Wire and Enersys
The main advantage of trading using opposite Encore Wire and Enersys positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Encore Wire 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.| Encore Wire vs. Advanced Energy Industries | Encore Wire vs. Acuity Brands | Encore Wire vs. Enersys | Encore Wire vs. nVent Electric PLC |
| 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 Money Flow Index module to determine momentum by analyzing Money Flow Index and other technical indicators.
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