Correlation Between Aena SA and ENCE Energa
Can any of the company-specific risk be diversified away by investing in both Aena SA and ENCE Energa 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 Aena SA and ENCE Energa into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Aena SA and ENCE Energa y, you can compare the effects of market volatilities on Aena SA and ENCE Energa 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 Aena SA with a short position of ENCE Energa. Check out your portfolio center. Please also check ongoing floating volatility patterns of Aena SA and ENCE Energa.
Diversification Opportunities for Aena SA and ENCE Energa
-0.42 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Aena and ENCE is -0.42. Overlapping area represents the amount of risk that can be diversified away by holding Aena SA and ENCE Energa y in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ENCE Energa y and Aena SA 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 Aena SA are associated (or correlated) with ENCE Energa. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of ENCE Energa y has no effect on the direction of Aena SA i.e., Aena SA and ENCE Energa go up and down completely randomly.
Pair Corralation between Aena SA and ENCE Energa
Assuming the 90 days trading horizon Aena SA is expected to generate 1.04 times less return on investment than ENCE Energa. But when comparing it to its historical volatility, Aena SA is 1.35 times less risky than ENCE Energa. It trades about 0.06 of its potential returns per unit of risk. ENCE Energa y is currently generating about 0.05 of returns per unit of risk over similar time horizon. If you would invest 312.00 in ENCE Energa y on October 22, 2024 and sell it today you would earn a total of 25.00 from holding ENCE Energa y or generate 8.01% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Aena SA vs. ENCE Energa y
Performance |
| Timeline |
| Aena SA |
| ENCE Energa y |
Aena SA and ENCE Energa Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Aena SA and ENCE Energa
The main advantage of trading using opposite Aena SA and ENCE Energa positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Aena SA position performs unexpectedly, ENCE Energa 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 ENCE Energa will offset losses from the drop in ENCE Energa's long position.| Aena SA vs. Bankinter | Aena SA vs. Energy Solar Tech | Aena SA vs. Plasticos Compuestos SA | Aena SA vs. Home Capital Rentals |
| ENCE Energa vs. Acerinox | ENCE Energa vs. CIE Automotive SA | ENCE Energa vs. Mapfre | ENCE Energa vs. ArcelorMittal 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 Performance Analysis module to check effects of mean-variance optimization against your current asset allocation.
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