Correlation Between Domini Impact and Enhanced

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

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

Diversification Opportunities for Domini Impact and Enhanced

0.87

Correlation Coefficient

Domini Impact  Enhanced

Very poor diversification

The 3 months correlation between Domini and Enhanced is 0.87. Overlapping area represents the amount of risk that can be diversified away by holding Domini Impact International and Enhanced Large Pany in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Enhanced Large Pany and Domini Impact 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 Domini Impact International are associated (or correlated) with Enhanced. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Enhanced Large Pany has no effect on the direction of Domini Impact i.e., Domini Impact and Enhanced go up and down completely randomly.

Pair Corralation between Domini Impact and Enhanced

Assuming the 90 days horizon Domini Impact is expected to generate 1.38 times less return on investment than Enhanced. In addition to that, Domini Impact is 1.31 times more volatile than Enhanced Large Pany. It trades about 0.14 of its total potential returns per unit of risk. Enhanced Large Pany is currently generating about 0.24 per unit of volatility. If you would invest  1,485  in Enhanced Large Pany on May 25, 2025 and sell it today you would earn a total of  144.00  from holding Enhanced Large Pany or generate 9.7% return on investment over 90 days.

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

Domini Impact International  vs.  Enhanced Large Pany

Domini Impact Intern

Risk-Adjusted Performance

Fair

Compared to the overall equity markets, risk-adjusted returns on investments in Domini Impact International are ranked lower than 10 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly weak basic indicators, Domini Impact may actually be approaching a critical reversion point that can send shares even higher in September 2025.

Enhanced Large Pany

Risk-Adjusted Performance

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Enhanced Large Pany are ranked lower than 19 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly weak essential indicators, Enhanced may actually be approaching a critical reversion point that can send shares even higher in September 2025.

Pair Trading with Domini Impact and Enhanced

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

The idea behind Domini Impact International and Enhanced Large Pany 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 Suggestion module to get suggestions outside of your existing asset allocation including your own model portfolios.