Correlation Between ENN Energy and Dow Jones
Can any of the company-specific risk be diversified away by investing in both ENN Energy and Dow Jones 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 ENN Energy and Dow Jones into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between ENN Energy Holdings and Dow Jones Industrial, you can compare the effects of market volatilities on ENN Energy and Dow Jones 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 ENN Energy with a short position of Dow Jones. Check out your portfolio center. Please also check ongoing floating volatility patterns of ENN Energy and Dow Jones.
Diversification Opportunities for ENN Energy and Dow Jones
0.69 | Correlation Coefficient |
Poor diversification
The 3 months correlation between ENN and Dow is 0.69. Overlapping area represents the amount of risk that can be diversified away by holding ENN Energy Holdings and Dow Jones Industrial in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Dow Jones Industrial and ENN Energy 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 ENN Energy Holdings are associated (or correlated) with Dow Jones. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Dow Jones Industrial has no effect on the direction of ENN Energy i.e., ENN Energy and Dow Jones go up and down completely randomly.
Pair Corralation between ENN Energy and Dow Jones
Assuming the 90 days horizon ENN Energy Holdings is expected to generate 6.54 times more return on investment than Dow Jones. However, ENN Energy is 6.54 times more volatile than Dow Jones Industrial. It trades about 0.07 of its potential returns per unit of risk. Dow Jones Industrial is currently generating about 0.12 per unit of risk. If you would invest 370.00 in ENN Energy Holdings on September 4, 2024 and sell it today you would earn a total of 240.00 from holding ENN Energy Holdings or generate 64.86% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 98.8% |
| Values | Daily Returns |
ENN Energy Holdings vs. Dow Jones Industrial
Performance |
| Timeline |
ENN Energy and Dow Jones Volatility Contrast
Predicted Return Density |
| Returns |
ENN Energy Holdings
Pair trading matchups for ENN Energy
Dow Jones Industrial
Pair trading matchups for Dow Jones
Pair Trading with ENN Energy and Dow Jones
The main advantage of trading using opposite ENN Energy and Dow Jones positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if ENN Energy position performs unexpectedly, Dow Jones 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 Dow Jones will offset losses from the drop in Dow Jones' long position.| ENN Energy vs. PT Bank Maybank | ENN Energy vs. QBE Insurance Group | ENN Energy vs. The Hanover Insurance | ENN Energy vs. Meiko Electronics Co |
| Dow Jones vs. Gentex | Dow Jones vs. American Axle Manufacturing | Dow Jones vs. Pearson PLC ADR | Dow Jones vs. Marine Products |
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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