Correlation Between Enlight Renewable and Israel Corp

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

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

Diversification Opportunities for Enlight Renewable and Israel Corp

-0.2

Correlation Coefficient

Enlight Renewable  Israel Corp

Good diversification

The 3 months correlation between Enlight and Israel is -0.2. Overlapping area represents the amount of risk that can be diversified away by holding Enlight Renewable Energy and Israel Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Israel Corp and Enlight Renewable 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 Enlight Renewable Energy are associated (or correlated) with Israel Corp. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Israel Corp has no effect on the direction of Enlight Renewable i.e., Enlight Renewable and Israel Corp go up and down completely randomly.

Pair Corralation between Enlight Renewable and Israel Corp

Assuming the 90 days trading horizon Enlight Renewable Energy is expected to under-perform the Israel Corp. But the stock apears to be less risky and, when comparing its historical volatility, Enlight Renewable Energy is 1.45 times less risky than Israel Corp. The stock trades about -0.01 of its potential returns per unit of risk. The Israel Corp is currently generating about 0.23 of returns per unit of risk over similar time horizon. If you would invest  7,398,000  in Israel Corp on September 16, 2024 and sell it today you would earn a total of  2,491,000  from holding Israel Corp or generate 33.67% return on investment over 90 days.

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

Enlight Renewable Energy  vs.  Israel Corp

Enlight Renewable Energy

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Enlight Renewable Energy has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong basic indicators, Enlight Renewable is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Israel Corp

Risk-Adjusted Performance

17 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Israel Corp are ranked lower than 17 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Israel Corp sustained solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Enlight Renewable and Israel Corp

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

The idea behind Enlight Renewable Energy and Israel Corp 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 Portfolio Suggestion module to get suggestions outside of your existing asset allocation including your own model portfolios.