Correlation Between Enel Generacion and Central Puerto
Can any of the company-specific risk be diversified away by investing in both Enel Generacion and Central Puerto 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 Generacion and Central Puerto into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Enel Generacion Costanera and Central Puerto SA, you can compare the effects of market volatilities on Enel Generacion and Central Puerto 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 Generacion with a short position of Central Puerto. Check out your portfolio center. Please also check ongoing floating volatility patterns of Enel Generacion and Central Puerto.
Diversification Opportunities for Enel Generacion and Central Puerto
0.9 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between Enel and Central is 0.9. Overlapping area represents the amount of risk that can be diversified away by holding Enel Generacion Costanera and Central Puerto SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Central Puerto SA and Enel Generacion 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 Generacion Costanera are associated (or correlated) with Central Puerto. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Central Puerto SA has no effect on the direction of Enel Generacion i.e., Enel Generacion and Central Puerto go up and down completely randomly.
Pair Corralation between Enel Generacion and Central Puerto
Assuming the 90 days trading horizon Enel Generacion is expected to generate 2.41 times less return on investment than Central Puerto. But when comparing it to its historical volatility, Enel Generacion Costanera is 1.04 times less risky than Central Puerto. It trades about 0.04 of its potential returns per unit of risk. Central Puerto SA is currently generating about 0.08 of returns per unit of risk over similar time horizon. If you would invest 117,790 in Central Puerto SA on September 1, 2024 and sell it today you would earn a total of 33,710 from holding Central Puerto SA or generate 28.62% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Enel Generacion Costanera vs. Central Puerto SA
Performance |
| Timeline |
| Enel Generacion Costanera |
| Central Puerto SA |
Enel Generacion and Central Puerto Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Enel Generacion and Central Puerto
The main advantage of trading using opposite Enel Generacion and Central Puerto positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Enel Generacion position performs unexpectedly, Central Puerto 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 Central Puerto will offset losses from the drop in Central Puerto's long position.| Enel Generacion vs. Empresa Distribuidora Electrica | Enel Generacion vs. Longvie SA | Enel Generacion vs. American Express Co | Enel Generacion vs. United States Steel |
| Central Puerto vs. Empresa Distribuidora Electrica | Central Puerto vs. Longvie SA | Central Puerto vs. American Express Co | Central Puerto 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 USA ETFs module to find actively traded Exchange Traded Funds (ETF) in USA.
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