Correlation Between ENN Energy and Culp
Can any of the company-specific risk be diversified away by investing in both ENN Energy and Culp 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 Culp 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 Culp Inc, you can compare the effects of market volatilities on ENN Energy and Culp 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 Culp. Check out your portfolio center. Please also check ongoing floating volatility patterns of ENN Energy and Culp.
Diversification Opportunities for ENN Energy and Culp
0.14 | Correlation Coefficient |
Average diversification
The 3 months correlation between ENN and Culp is 0.14. Overlapping area represents the amount of risk that can be diversified away by holding ENN Energy Holdings and Culp Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Culp Inc 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 Culp. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Culp Inc has no effect on the direction of ENN Energy i.e., ENN Energy and Culp go up and down completely randomly.
Pair Corralation between ENN Energy and Culp
Assuming the 90 days horizon ENN Energy Holdings is expected to generate 1.91 times more return on investment than Culp. However, ENN Energy is 1.91 times more volatile than Culp Inc. It trades about -0.1 of its potential returns per unit of risk. Culp Inc is currently generating about -0.27 per unit of risk. If you would invest 2,857 in ENN Energy Holdings on August 24, 2024 and sell it today you would lose (213.00) from holding ENN Energy Holdings or give up 7.46% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 95.65% |
| Values | Daily Returns |
ENN Energy Holdings vs. Culp Inc
Performance |
| Timeline |
| ENN Energy Holdings |
| Culp Inc |
ENN Energy and Culp Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with ENN Energy and Culp
The main advantage of trading using opposite ENN Energy and Culp positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if ENN Energy position performs unexpectedly, Culp 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 Culp will offset losses from the drop in Culp's long position.| ENN Energy vs. NewJersey Resources | ENN Energy vs. Atmos Energy | ENN Energy vs. UGI Corporation | ENN Energy vs. Chesapeake Utilities |
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 Bond Analysis module to evaluate and analyze corporate bonds as a potential investment for your portfolios..
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