Correlation Between Bolsas Y and Enel Generacion
Can any of the company-specific risk be diversified away by investing in both Bolsas Y and Enel Generacion 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 Bolsas Y and Enel Generacion into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Bolsas y Mercados and Enel Generacion Costanera, you can compare the effects of market volatilities on Bolsas Y and Enel Generacion 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 Bolsas Y with a short position of Enel Generacion. Check out your portfolio center. Please also check ongoing floating volatility patterns of Bolsas Y and Enel Generacion.
Diversification Opportunities for Bolsas Y and Enel Generacion
0.85 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Bolsas and Enel is 0.85. Overlapping area represents the amount of risk that can be diversified away by holding Bolsas y Mercados and Enel Generacion Costanera in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Enel Generacion Costanera and Bolsas Y 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 Bolsas y Mercados are associated (or correlated) with Enel Generacion. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Enel Generacion Costanera has no effect on the direction of Bolsas Y i.e., Bolsas Y and Enel Generacion go up and down completely randomly.
Pair Corralation between Bolsas Y and Enel Generacion
Assuming the 90 days trading horizon Bolsas Y is expected to generate 2.34 times less return on investment than Enel Generacion. But when comparing it to its historical volatility, Bolsas y Mercados is 1.5 times less risky than Enel Generacion. It trades about 0.23 of its potential returns per unit of risk. Enel Generacion Costanera is currently generating about 0.35 of returns per unit of risk over similar time horizon. If you would invest 34,850 in Enel Generacion Costanera on September 3, 2024 and sell it today you would earn a total of 7,500 from holding Enel Generacion Costanera or generate 21.52% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Bolsas y Mercados vs. Enel Generacion Costanera
Performance |
| Timeline |
| Bolsas y Mercados |
| Enel Generacion Costanera |
Bolsas Y and Enel Generacion Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Bolsas Y and Enel Generacion
The main advantage of trading using opposite Bolsas Y and Enel Generacion positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Bolsas Y position performs unexpectedly, Enel Generacion 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 Generacion will offset losses from the drop in Enel Generacion's long position.| Bolsas Y vs. Harmony Gold Mining | Bolsas Y vs. Agrometal SAI | Bolsas Y vs. Transportadora de Gas | Bolsas Y vs. United States Steel |
| Enel Generacion vs. Agrometal SAI | Enel Generacion vs. Compania de Transporte | Enel Generacion vs. United States Steel |
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 Transaction History module to view history of all your transactions and understand their impact on performance.
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