Correlation Between Enel Chile and WEC Energy
Can any of the company-specific risk be diversified away by investing in both Enel Chile and WEC Energy 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 Enel Chile and WEC Energy into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Enel Chile SA and WEC Energy Group, you can compare the effects of market volatilities on Enel Chile and WEC Energy 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 Enel Chile with a short position of WEC Energy. Check out your portfolio center. Please also check ongoing floating volatility patterns of Enel Chile and WEC Energy.
Diversification Opportunities for Enel Chile and WEC Energy
0.29 | Correlation Coefficient |
Modest diversification
The 3 months correlation between Enel and WEC is 0.29. Overlapping area represents the amount of risk that can be diversified away by holding Enel Chile SA and WEC Energy Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on WEC Energy Group and Enel Chile 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 Enel Chile SA are associated (or correlated) with WEC Energy. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of WEC Energy Group has no effect on the direction of Enel Chile i.e., Enel Chile and WEC Energy go up and down completely randomly.
Pair Corralation between Enel Chile and WEC Energy
Assuming the 90 days horizon Enel Chile SA is expected to generate 0.7 times more return on investment than WEC Energy. However, Enel Chile SA is 1.43 times less risky than WEC Energy. It trades about 0.2 of its potential returns per unit of risk. WEC Energy Group is currently generating about 0.05 per unit of risk. If you would invest 272.00 in Enel Chile SA on November 2, 2024 and sell it today you would earn a total of 14.00 from holding Enel Chile SA or generate 5.15% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Enel Chile SA vs. WEC Energy Group
Performance |
| Timeline |
| Enel Chile SA |
| WEC Energy Group |
Enel Chile and WEC Energy Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Enel Chile and WEC Energy
The main advantage of trading using opposite Enel Chile and WEC Energy positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Enel Chile position performs unexpectedly, WEC Energy 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 WEC Energy will offset losses from the drop in WEC Energy's long position.| Enel Chile vs. CVS Health | Enel Chile vs. SHIP HEALTHCARE HLDGINC | Enel Chile vs. National Health Investors | Enel Chile vs. PSI Software AG |
| WEC Energy vs. Duke Energy | WEC Energy vs. ENDESA ADR 12 | WEC Energy vs. CK Infrastructure Holdings | WEC Energy vs. Enel Chile SA |
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 Correlation Analysis module to reduce portfolio risk simply by holding instruments which are not perfectly correlated.
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