Correlation Between American Vanguard and ENFY

Can any of the company-specific risk be diversified away by investing in both American Vanguard and ENFY 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 American Vanguard and ENFY into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between American Vanguard and ENFY, you can compare the effects of market volatilities on American Vanguard and ENFY 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 American Vanguard with a short position of ENFY. Check out your portfolio center. Please also check ongoing floating volatility patterns of American Vanguard and ENFY.

Diversification Opportunities for American Vanguard and ENFY

-0.52

Correlation Coefficient

American Vanguard  ENFY

Excellent diversification

The 3 months correlation between American and ENFY is -0.52. Overlapping area represents the amount of risk that can be diversified away by holding American Vanguard and ENFY in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ENFY and American Vanguard 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 American Vanguard are associated (or correlated) with ENFY. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of ENFY has no effect on the direction of American Vanguard i.e., American Vanguard and ENFY go up and down completely randomly.

Pair Corralation between American Vanguard and ENFY

Considering the 90-day investment horizon American Vanguard is expected to generate 4.91 times less return on investment than ENFY. But when comparing it to its historical volatility, American Vanguard is 3.42 times less risky than ENFY. It trades about 0.02 of its potential returns per unit of risk. ENFY is currently generating about 0.02 of returns per unit of risk over similar time horizon. If you would invest  173.00  in ENFY on September 4, 2024 and sell it today you would lose (14.00) from holding ENFY or give up 8.09% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	100.0%
Values	Daily Returns

American Vanguard  vs.  ENFY

American Vanguard

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in American Vanguard are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. In spite of rather sound basic indicators, American Vanguard is not utilizing all of its potentials. The latest stock price tumult, may contribute to shorter-term losses for the shareholders.

ENFY

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in ENFY are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. In spite of fairly fragile technical and fundamental indicators, ENFY showed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with American Vanguard and ENFY

The main advantage of trading using opposite American Vanguard and ENFY positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if American Vanguard position performs unexpectedly, ENFY 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 ENFY will offset losses from the drop in ENFY's long position.

The idea behind American Vanguard and ENFY pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.

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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 Economic Indicators module to top statistical indicators that provide insights into how an economy is performing.