Correlation Between Espey Mfg and Enovix Corp

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

By analyzing existing cross correlation between Espey Mfg Electronics and Enovix Corp, you can compare the effects of market volatilities on Espey Mfg and Enovix Corp 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 Espey Mfg with a short position of Enovix Corp. Check out your portfolio center. Please also check ongoing floating volatility patterns of Espey Mfg and Enovix Corp.

Diversification Opportunities for Espey Mfg and Enovix Corp

0.26

Correlation Coefficient

Espey Mfg  Enovix Corp

Modest diversification

The 3 months correlation between Espey and Enovix is 0.26. Overlapping area represents the amount of risk that can be diversified away by holding Espey Mfg Electronics and Enovix Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Enovix Corp and Espey Mfg 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 Espey Mfg Electronics are associated (or correlated) with Enovix Corp. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Enovix Corp has no effect on the direction of Espey Mfg i.e., Espey Mfg and Enovix Corp go up and down completely randomly.

Pair Corralation between Espey Mfg and Enovix Corp

Considering the 90-day investment horizon Espey Mfg Electronics is expected to generate 0.57 times more return on investment than Enovix Corp. However, Espey Mfg Electronics is 1.75 times less risky than Enovix Corp. It trades about 0.01 of its potential returns per unit of risk. Enovix Corp is currently generating about -0.21 per unit of risk. If you would invest  2,540  in Espey Mfg Electronics on February 1, 2024 and sell it today you would lose (10.00) from holding Espey Mfg Electronics or give up 0.39% of portfolio value over 90 days.

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

Espey Mfg Electronics  vs.  Enovix Corp

Espey Mfg Electronics

Risk-Adjusted Performance

7 of 100

OK

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

Enovix Corp

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Enovix Corp has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of unsteady performance in the last few months, the Stock's basic indicators remain fairly strong which may send shares a bit higher in June 2024. The current disturbance may also be a sign of long term up-swing for the company investors.

Pair Trading with Espey Mfg and Enovix Corp

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

The idea behind Espey Mfg Electronics and Enovix Corp 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 Theme Ratings module to determine theme ratings based on digital equity recommendations. Macroaxis theme ratings are based on combination of fundamental analysis and risk-adjusted market performance.