Correlation Between Enerpac Tool and Global X

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

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

Diversification Opportunities for Enerpac Tool and Global X

0.91

Correlation Coefficient

Enerpac Tool  Global X

Almost no diversification

The 3 months correlation between Enerpac and Global is 0.91. Overlapping area represents the amount of risk that can be diversified away by holding Enerpac Tool Group and Global X Funds in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Global X Funds and Enerpac Tool 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 Enerpac Tool Group are associated (or correlated) with Global X. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Global X Funds has no effect on the direction of Enerpac Tool i.e., Enerpac Tool and Global X go up and down completely randomly.

Pair Corralation between Enerpac Tool and Global X

Given the investment horizon of 90 days Enerpac Tool Group is expected to generate 1.65 times more return on investment than Global X. However, Enerpac Tool is 1.65 times more volatile than Global X Funds. It trades about 0.18 of its potential returns per unit of risk. Global X Funds is currently generating about 0.14 per unit of risk. If you would invest  3,028  in Enerpac Tool Group on January 20, 2024 and sell it today you would earn a total of  447.00  from holding Enerpac Tool Group or generate 14.76% return on investment over 90 days.

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

Enerpac Tool Group  vs.  Global X Funds

Enerpac Tool Group

Risk-Adjusted Performance

14 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Enerpac Tool Group are ranked lower than 14 (%) of all global equities and portfolios over the last 90 days. In spite of rather weak basic indicators, Enerpac Tool exhibited solid returns over the last few months and may actually be approaching a breakup point.

Global X Funds

Risk-Adjusted Performance

10 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Global X Funds are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. In spite of fairly weak basic indicators, Global X may actually be approaching a critical reversion point that can send shares even higher in May 2024.

Pair Trading with Enerpac Tool and Global X

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

The idea behind Enerpac Tool Group and Global X Funds 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.

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 Portfolio Center module to all portfolio management and optimization tools to improve performance of your portfolios.