Correlation Between Encore Wire and ABIVAX Société

Can any of the company-specific risk be diversified away by investing in both Encore Wire and ABIVAX Société 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 Encore Wire and ABIVAX Société into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Encore Wire and ABIVAX Socit Anonyme, you can compare the effects of market volatilities on Encore Wire and ABIVAX Société 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 Encore Wire with a short position of ABIVAX Société. Check out your portfolio center. Please also check ongoing floating volatility patterns of Encore Wire and ABIVAX Société.

Diversification Opportunities for Encore Wire and ABIVAX Société

0.26

Correlation Coefficient

Encore Wire  ABIVAX Société

Modest diversification

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

Pair Corralation between Encore Wire and ABIVAX Société

Given the investment horizon of 90 days Encore Wire is expected to generate 2.51 times less return on investment than ABIVAX Société. But when comparing it to its historical volatility, Encore Wire is 2.86 times less risky than ABIVAX Société. It trades about 0.25 of its potential returns per unit of risk. ABIVAX Socit Anonyme is currently generating about 0.22 of returns per unit of risk over similar time horizon. If you would invest  1,095  in ABIVAX Socit Anonyme on January 24, 2024 and sell it today you would earn a total of  420.00  from holding ABIVAX Socit Anonyme or generate 38.36% return on investment over 90 days.

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

Encore Wire  vs.  ABIVAX Socit Anonyme

Encore Wire

Risk-Adjusted Performance

13 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Encore Wire are ranked lower than 13 (%) of all global equities and portfolios over the last 90 days. In spite of rather uncertain basic indicators, Encore Wire exhibited solid returns over the last few months and may actually be approaching a breakup point.

ABIVAX Socit Anonyme

Risk-Adjusted Performance

9 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in ABIVAX Socit Anonyme are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, ABIVAX Société reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Encore Wire and ABIVAX Société

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

The idea behind Encore Wire and ABIVAX Socit Anonyme 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 ETFs module to find actively traded Exchange Traded Funds (ETF) from around the world.