Correlation Between Return Stacked and Enova International

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

By analyzing existing cross correlation between Return Stacked Bonds and Enova International, you can compare the effects of market volatilities on Return Stacked and Enova International 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 Return Stacked with a short position of Enova International. Check out your portfolio center. Please also check ongoing floating volatility patterns of Return Stacked and Enova International.

Diversification Opportunities for Return Stacked and Enova International

0.17

Correlation Coefficient

Return Stacked  Enova International

Average diversification

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

Pair Corralation between Return Stacked and Enova International

Given the investment horizon of 90 days Return Stacked is expected to generate 5.85 times less return on investment than Enova International. But when comparing it to its historical volatility, Return Stacked Bonds is 6.35 times less risky than Enova International. It trades about 0.07 of its potential returns per unit of risk. Enova International is currently generating about 0.06 of returns per unit of risk over similar time horizon. If you would invest  5,146  in Enova International on March 3, 2025 and sell it today you would earn a total of  4,121  from holding Enova International or generate 80.08% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Insignificant
Accuracy	22.63%
Values	Daily Returns

Return Stacked Bonds  vs.  Enova International

Return Stacked Bonds

Risk-Adjusted Performance

Very Weak

Over the last 90 days Return Stacked Bonds has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong fundamental drivers, Return Stacked is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Enova International

Risk-Adjusted Performance

Very Weak

Over the last 90 days Enova International has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong basic indicators, Enova International is not utilizing all of its potentials. The recent stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Return Stacked and Enova International

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

The idea behind Return Stacked Bonds and Enova International 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 Fundamentals Comparison module to compare fundamentals across multiple equities to find investing opportunities.