Correlation Between Allete and Enel SpA
Can any of the company-specific risk be diversified away by investing in both Allete and Enel SpA 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 Allete and Enel SpA into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Allete Inc and Enel SpA, you can compare the effects of market volatilities on Allete and Enel SpA 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 Allete with a short position of Enel SpA. Check out your portfolio center. Please also check ongoing floating volatility patterns of Allete and Enel SpA.
Diversification Opportunities for Allete and Enel SpA
Excellent diversification
The 3 months correlation between Allete and Enel is -0.59. Overlapping area represents the amount of risk that can be diversified away by holding Allete Inc and Enel SpA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Enel SpA and Allete 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 Allete Inc are associated (or correlated) with Enel SpA. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Enel SpA has no effect on the direction of Allete i.e., Allete and Enel SpA go up and down completely randomly.
Pair Corralation between Allete and Enel SpA
Considering the 90-day investment horizon Allete Inc is expected to generate 0.2 times more return on investment than Enel SpA. However, Allete Inc is 4.91 times less risky than Enel SpA. It trades about 0.1 of its potential returns per unit of risk. Enel SpA is currently generating about 0.01 per unit of risk. If you would invest 6,177 in Allete Inc on August 29, 2024 and sell it today you would earn a total of 310.00 from holding Allete Inc or generate 5.02% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Allete Inc vs. Enel SpA
Performance |
| Timeline |
| Allete Inc |
| Enel SpA |
Allete and Enel SpA Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Allete and Enel SpA
The main advantage of trading using opposite Allete and Enel SpA positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Allete position performs unexpectedly, Enel SpA 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 Enel SpA will offset losses from the drop in Enel SpA's long position.| Allete vs. Avista | Allete vs. Black Hills | Allete vs. Montauk Renewables | Allete vs. Companhia Paranaense de |
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 Portfolio Holdings module to check your current holdings and cash postion to detemine if your portfolio needs rebalancing.
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