Correlation Between International General and Enstar Group

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

By analyzing existing cross correlation between International General Insurance and Enstar Group Limited, you can compare the effects of market volatilities on International General and Enstar Group 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 International General with a short position of Enstar Group. Check out your portfolio center. Please also check ongoing floating volatility patterns of International General and Enstar Group.

Diversification Opportunities for International General and Enstar Group

-0.13

Correlation Coefficient

International General  Enstar Group

Good diversification

The 3 months correlation between International and Enstar is -0.13. Overlapping area represents the amount of risk that can be diversified away by holding International General Insuranc and Enstar Group Limited in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Enstar Group Limited and International General 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 International General Insurance are associated (or correlated) with Enstar Group. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Enstar Group Limited has no effect on the direction of International General i.e., International General and Enstar Group go up and down completely randomly.

Pair Corralation between International General and Enstar Group

Given the investment horizon of 90 days International General Insurance is expected to under-perform the Enstar Group. In addition to that, International General is 1.54 times more volatile than Enstar Group Limited. It trades about -0.1 of its total potential returns per unit of risk. Enstar Group Limited is currently generating about -0.08 per unit of volatility. If you would invest  29,871  in Enstar Group Limited on February 2, 2024 and sell it today you would lose (576.00) from holding Enstar Group Limited or give up 1.93% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	100.0%
Values	Daily Returns

International General Insuranc  vs.  Enstar Group Limited

International General

Risk-Adjusted Performance

2 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in International General Insurance are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. In spite of rather sound forward indicators, International General is not utilizing all of its potentials. The current stock price tumult, may contribute to shorter-term losses for the shareholders.

Enstar Group Limited

Risk-Adjusted Performance

7 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Enstar Group Limited are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. Even with relatively fragile technical and fundamental indicators, Enstar Group may actually be approaching a critical reversion point that can send shares even higher in June 2024.

Pair Trading with International General and Enstar Group

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

The idea behind International General Insurance and Enstar Group Limited 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 Sectors module to list of equity sectors categorizing publicly traded companies based on their primary business activities.