Correlation Between Enersys and ABB
Can any of the company-specific risk be diversified away by investing in both Enersys and ABB 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 ABB into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Enersys and ABB Ltd ADR, you can compare the effects of market volatilities on Enersys and ABB 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 ABB. Check out your portfolio center. Please also check ongoing floating volatility patterns of Enersys and ABB.
Diversification Opportunities for Enersys and ABB
Very good diversification
The 3 months correlation between Enersys and ABB is -0.36. Overlapping area represents the amount of risk that can be diversified away by holding Enersys and ABB Ltd ADR in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ABB Ltd ADR 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 ABB. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of ABB Ltd ADR has no effect on the direction of Enersys i.e., Enersys and ABB go up and down completely randomly.
Pair Corralation between Enersys and ABB
Considering the 90-day investment horizon Enersys is expected to generate 1.37 times less return on investment than ABB. In addition to that, Enersys is 1.3 times more volatile than ABB Ltd ADR. It trades about 0.05 of its total potential returns per unit of risk. ABB Ltd ADR is currently generating about 0.09 per unit of volatility. If you would invest 2,630 in ABB Ltd ADR on February 3, 2024 and sell it today you would earn a total of 1,270 from holding ABB Ltd ADR or generate 48.29% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Against |
Strength | Insignificant |
Accuracy | 59.92% |
Values | Daily Returns |
Enersys vs. ABB Ltd ADR
Performance |
Timeline |
Enersys |
ABB Ltd ADR |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Very Weak
Enersys and ABB Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Enersys and ABB
The main advantage of trading using opposite Enersys and ABB positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Enersys position performs unexpectedly, ABB 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 ABB will offset losses from the drop in ABB's long position.Enersys vs. Kimball Electronics | Enersys vs. Hollysys Automation Technologies | Enersys vs. Hayward Holdings | Enersys vs. Energizer Holdings |
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 Stocks Directory module to find actively traded stocks across global markets.
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