Correlation Between Enovix Corp and GrafTech International

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

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

Diversification Opportunities for Enovix Corp and GrafTech International

0.15

Correlation Coefficient

Enovix Corp  GrafTech International

Average diversification

The 3 months correlation between Enovix and GrafTech is 0.15. Overlapping area represents the amount of risk that can be diversified away by holding Enovix Corp and GrafTech International in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on GrafTech International and Enovix Corp 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 Enovix Corp are associated (or correlated) with GrafTech International. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of GrafTech International has no effect on the direction of Enovix Corp i.e., Enovix Corp and GrafTech International go up and down completely randomly.

Pair Corralation between Enovix Corp and GrafTech International

Given the investment horizon of 90 days Enovix Corp is expected to generate 10.63 times less return on investment than GrafTech International. But when comparing it to its historical volatility, Enovix Corp is 1.11 times less risky than GrafTech International. It trades about 0.03 of its potential returns per unit of risk. GrafTech International is currently generating about 0.27 of returns per unit of risk over similar time horizon. If you would invest  77.00  in GrafTech International on September 12, 2024 and sell it today you would earn a total of  123.00  from holding GrafTech International or generate 159.74% return on investment over 90 days.

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

Enovix Corp  vs.  GrafTech International

Enovix Corp

Risk-Adjusted Performance

2 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Enovix Corp are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. In spite of fairly inconsistent basic indicators, Enovix Corp may actually be approaching a critical reversion point that can send shares even higher in January 2025.

GrafTech International

Risk-Adjusted Performance

21 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in GrafTech International are ranked lower than 21 (%) of all global equities and portfolios over the last 90 days. Despite nearly unsteady basic indicators, GrafTech International reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Enovix Corp and GrafTech International

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

The idea behind Enovix Corp and GrafTech International 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 Portfolio Holdings module to check your current holdings and cash postion to detemine if your portfolio needs rebalancing.