Correlation Between Enersys and SFL
Can any of the company-specific risk be diversified away by investing in both Enersys and SFL 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 SFL into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Enersys and SFL Corporation, you can compare the effects of market volatilities on Enersys and SFL 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 SFL. Check out your portfolio center. Please also check ongoing floating volatility patterns of Enersys and SFL.
Diversification Opportunities for Enersys and SFL
Very good diversification
The 3 months correlation between Enersys and SFL is -0.33. Overlapping area represents the amount of risk that can be diversified away by holding Enersys and SFL Corp. in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on SFL Corporation 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 SFL. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of SFL Corporation has no effect on the direction of Enersys i.e., Enersys and SFL go up and down completely randomly.
Pair Corralation between Enersys and SFL
Considering the 90-day investment horizon Enersys is expected to generate 1.61 times less return on investment than SFL. But when comparing it to its historical volatility, Enersys is 1.37 times less risky than SFL. It trades about 0.12 of its potential returns per unit of risk. SFL Corporation is currently generating about 0.14 of returns per unit of risk over similar time horizon. If you would invest 1,304 in SFL Corporation on February 4, 2024 and sell it today you would earn a total of 47.00 from holding SFL Corporation or generate 3.6% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Against |
Strength | Insignificant |
Accuracy | 100.0% |
Values | Daily Returns |
Enersys vs. SFL Corp.
Performance |
Timeline |
Enersys |
SFL Corporation |
Enersys and SFL Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Enersys and SFL
The main advantage of trading using opposite Enersys and SFL positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Enersys position performs unexpectedly, SFL 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 SFL will offset losses from the drop in SFL's long position.Enersys vs. Advanced Energy Industries | Enersys vs. Hubbell | Enersys vs. Acuity Brands | Enersys vs. Kimball Electronics |
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 Positions Ratings module to determine portfolio positions ratings based on digital equity recommendations. Macroaxis instant position ratings are based on combination of fundamental analysis and risk-adjusted market performance.
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