Correlation Between Fundamental Global and Enstar Group

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

By analyzing existing cross correlation between Fundamental Global and Enstar Group Limited, you can compare the effects of market volatilities on Fundamental Global and Enstar Group 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 Fundamental Global with a short position of Enstar Group. Check out your portfolio center. Please also check ongoing floating volatility patterns of Fundamental Global and Enstar Group.

Diversification Opportunities for Fundamental Global and Enstar Group

-0.33

Correlation Coefficient

Fundamental Global  Enstar Group

Very good diversification

The 3 months correlation between Fundamental and Enstar is -0.33. Overlapping area represents the amount of risk that can be diversified away by holding Fundamental Global and Enstar Group Limited in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Enstar Group Limited and Fundamental Global 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 Fundamental Global are associated (or correlated) with Enstar Group. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Enstar Group Limited has no effect on the direction of Fundamental Global i.e., Fundamental Global and Enstar Group go up and down completely randomly.

Pair Corralation between Fundamental Global and Enstar Group

Assuming the 90 days horizon Fundamental Global is expected to generate 13.7 times more return on investment than Enstar Group. However, Fundamental Global is 13.7 times more volatile than Enstar Group Limited. It trades about 0.11 of its potential returns per unit of risk. Enstar Group Limited is currently generating about 0.05 per unit of risk. If you would invest  1,494  in Fundamental Global on August 20, 2024 and sell it today you would earn a total of  132.00  from holding Fundamental Global or generate 8.84% return on investment over 90 days.

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

Fundamental Global  vs.  Enstar Group Limited

Fundamental Global

Risk-Adjusted Performance

7 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Fundamental Global are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. Even with relatively weak basic indicators, Fundamental Global reported solid returns over the last few months and may actually be approaching a breakup point.

Enstar Group Limited

Risk-Adjusted Performance

2 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Enstar Group Limited are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. Even with relatively invariable technical and fundamental indicators, Enstar Group is not utilizing all of its potentials. The latest stock price agitation, may contribute to short-term losses for the retail investors.

Pair Trading with Fundamental Global and Enstar Group

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

The idea behind Fundamental Global and Enstar Group Limited 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 Share Portfolio module to track or share privately all of your investments from the convenience of any device.