Correlation Between Plug Power and Enersys

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Can any of the company-specific risk be diversified away by investing in both Plug Power and Enersys 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 Plug Power and Enersys into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Plug Power and Enersys, you can compare the effects of market volatilities on Plug Power and Enersys 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 Plug Power with a short position of Enersys. Check out your portfolio center. Please also check ongoing floating volatility patterns of Plug Power and Enersys.

Diversification Opportunities for Plug Power and Enersys

0.25
  Correlation Coefficient

Modest diversification

The 3 months correlation between Plug and Enersys is 0.25. Overlapping area represents the amount of risk that can be diversified away by holding Plug Power and Enersys in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Enersys and Plug Power 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 Plug Power are associated (or correlated) with Enersys. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Enersys has no effect on the direction of Plug Power i.e., Plug Power and Enersys go up and down completely randomly.

Pair Corralation between Plug Power and Enersys

Given the investment horizon of 90 days Plug Power is expected to generate 3.3 times more return on investment than Enersys. However, Plug Power is 3.3 times more volatile than Enersys. It trades about 0.19 of its potential returns per unit of risk. Enersys is currently generating about -0.15 per unit of risk. If you would invest  197.00  in Plug Power on September 7, 2024 and sell it today you would earn a total of  48.00  from holding Plug Power or generate 24.37% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthVery Weak
Accuracy100.0%
ValuesDaily Returns

Plug Power  vs.  Enersys

 Performance 
       Timeline  
Plug Power 

Risk-Adjusted Performance

9 of 100

 
Weak
 
Strong
OK
Compared to the overall equity markets, risk-adjusted returns on investments in Plug Power are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. Despite nearly unsteady basic indicators, Plug Power reported solid returns over the last few months and may actually be approaching a breakup point.
Enersys 

Risk-Adjusted Performance

0 of 100

 
Weak
 
Strong
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 comparatively stable basic indicators, Enersys is not utilizing all of its potentials. The newest stock price uproar, may contribute to short-horizon losses for the private investors.

Plug Power and Enersys Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Plug Power and Enersys

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

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