Correlation Between GE Vernova and Enlight Renewable

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

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

Diversification Opportunities for GE Vernova and Enlight Renewable

0.17

Correlation Coefficient

GE Vernova  Enlight Renewable

Average diversification

The 3 months correlation between GEV and Enlight is 0.17. Overlapping area represents the amount of risk that can be diversified away by holding GE Vernova LLC and Enlight Renewable Energy in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Enlight Renewable Energy and GE Vernova 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 GE Vernova LLC are associated (or correlated) with Enlight Renewable. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Enlight Renewable Energy has no effect on the direction of GE Vernova i.e., GE Vernova and Enlight Renewable go up and down completely randomly.

Pair Corralation between GE Vernova and Enlight Renewable

Considering the 90-day investment horizon GE Vernova LLC is expected to generate 1.01 times more return on investment than Enlight Renewable. However, GE Vernova is 1.01 times more volatile than Enlight Renewable Energy. It trades about 0.22 of its potential returns per unit of risk. Enlight Renewable Energy is currently generating about 0.05 per unit of risk. If you would invest  23,715  in GE Vernova LLC on September 17, 2024 and sell it today you would earn a total of  10,061  from holding GE Vernova LLC or generate 42.42% return on investment over 90 days.

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

GE Vernova LLC  vs.  Enlight Renewable Energy

GE Vernova LLC

Risk-Adjusted Performance

17 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in GE Vernova LLC are ranked lower than 17 (%) of all global equities and portfolios over the last 90 days. In spite of fairly uncertain technical and fundamental indicators, GE Vernova showed solid returns over the last few months and may actually be approaching a breakup point.

Enlight Renewable Energy

Risk-Adjusted Performance

3 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Enlight Renewable Energy are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively unfluctuating essential indicators, Enlight Renewable may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Pair Trading with GE Vernova and Enlight Renewable

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

The idea behind GE Vernova LLC and Enlight Renewable Energy 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 Bollinger Bands module to use Bollinger Bands indicator to analyze target price for a given investing horizon.