Correlation Between Enersys and Siriuspoint

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

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

Diversification Opportunities for Enersys and Siriuspoint

-0.63

Correlation Coefficient

Enersys  Siriuspoint

Excellent diversification

The 3 months correlation between Enersys and Siriuspoint is -0.63. Overlapping area represents the amount of risk that can be diversified away by holding Enersys and Siriuspoint in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Siriuspoint and Enersys 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 Enersys are associated (or correlated) with Siriuspoint. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Siriuspoint has no effect on the direction of Enersys i.e., Enersys and Siriuspoint go up and down completely randomly.

Pair Corralation between Enersys and Siriuspoint

Considering the 90-day investment horizon Enersys is expected to under-perform the Siriuspoint. But the stock apears to be less risky and, when comparing its historical volatility, Enersys is 1.33 times less risky than Siriuspoint. The stock trades about -0.07 of its potential returns per unit of risk. The Siriuspoint is currently generating about 0.02 of returns per unit of risk over similar time horizon. If you would invest  1,425  in Siriuspoint on September 20, 2024 and sell it today you would earn a total of  25.00  from holding Siriuspoint or generate 1.75% return on investment over 90 days.

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

Enersys  vs.  Siriuspoint

Enersys

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Enersys has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest uncertain performance, the Stock's basic indicators remain stable and the newest uproar on Wall Street may also be a sign of mid-term gains for the firm private investors.

Siriuspoint

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Siriuspoint are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively stable basic indicators, Siriuspoint is not utilizing all of its potentials. The current stock price uproar, may contribute to short-horizon losses for the private investors.

Pair Trading with Enersys and Siriuspoint

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

The idea behind Enersys and Siriuspoint 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 Sign In To Macroaxis module to sign in to explore Macroaxis' wealth optimization platform and fintech modules.