Correlation Between Eos Energy and Enovix Corp

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

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

Diversification Opportunities for Eos Energy and Enovix Corp

0.75

Correlation Coefficient

Eos Energy  Enovix Corp

Poor diversification

The 3 months correlation between Eos and Enovix is 0.75. Overlapping area represents the amount of risk that can be diversified away by holding Eos Energy Enterprises and Enovix Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Enovix Corp and Eos Energy 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 Eos Energy Enterprises are associated (or correlated) with Enovix Corp. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Enovix Corp has no effect on the direction of Eos Energy i.e., Eos Energy and Enovix Corp go up and down completely randomly.

Pair Corralation between Eos Energy and Enovix Corp

Given the investment horizon of 90 days Eos Energy Enterprises is expected to generate 1.01 times more return on investment than Enovix Corp. However, Eos Energy is 1.01 times more volatile than Enovix Corp. It trades about 0.08 of its potential returns per unit of risk. Enovix Corp is currently generating about 0.05 per unit of risk. If you would invest  246.00  in Eos Energy Enterprises on September 2, 2024 and sell it today you would earn a total of  49.00  from holding Eos Energy Enterprises or generate 19.92% return on investment over 90 days.

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

Eos Energy Enterprises  vs.  Enovix Corp

Eos Energy Enterprises

Risk-Adjusted Performance

6 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Eos Energy Enterprises are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. In spite of rather weak basic indicators, Eos Energy exhibited solid returns over the last few months and may actually be approaching a breakup point.

Enovix Corp

Risk-Adjusted Performance

3 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Enovix Corp are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. In spite of fairly unsteady basic indicators, Enovix Corp showed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Eos Energy and Enovix Corp

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

The idea behind Eos Energy Enterprises and Enovix 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.

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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 Idea Optimizer module to use advanced portfolio builder with pre-computed micro ideas to build optimal portfolio .