Correlation Between Energisa and WHG REAL

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

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

Diversification Opportunities for Energisa and WHG REAL

0.86

Correlation Coefficient

Energisa  WHG REAL

Very poor diversification

The 3 months correlation between Energisa and WHG is 0.86. Overlapping area represents the amount of risk that can be diversified away by holding Energisa SA and WHG REAL ESTATE in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on WHG REAL ESTATE and Energisa 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 Energisa SA are associated (or correlated) with WHG REAL. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of WHG REAL ESTATE has no effect on the direction of Energisa i.e., Energisa and WHG REAL go up and down completely randomly.

Pair Corralation between Energisa and WHG REAL

Assuming the 90 days trading horizon Energisa SA is expected to under-perform the WHG REAL. In addition to that, Energisa is 1.73 times more volatile than WHG REAL ESTATE. It trades about -0.22 of its total potential returns per unit of risk. WHG REAL ESTATE is currently generating about -0.14 per unit of volatility. If you would invest  960.00  in WHG REAL ESTATE on September 5, 2024 and sell it today you would lose (66.00) from holding WHG REAL ESTATE or give up 6.88% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Strong
Accuracy	96.83%
Values	Daily Returns

Energisa SA  vs.  WHG REAL ESTATE

Energisa SA

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Energisa SA has generated negative risk-adjusted returns adding no value to investors with long positions. Despite uncertain performance in the last few months, the Stock's technical and fundamental indicators remain somewhat strong which may send shares a bit higher in January 2025. The current disturbance may also be a sign of long term up-swing for the company investors.

WHG REAL ESTATE

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days WHG REAL ESTATE has generated negative risk-adjusted returns adding no value to fund investors. Despite latest weak performance, the Fund's technical and fundamental indicators remain strong and the current disturbance on Wall Street may also be a sign of long term gains for the fund investors.

Pair Trading with Energisa and WHG REAL

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

The idea behind Energisa SA and WHG REAL ESTATE 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.

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 Performance Analysis module to check effects of mean-variance optimization against your current asset allocation.