Correlation Between Consumers Energy and ENEL Societa
Can any of the company-specific risk be diversified away by investing in both Consumers Energy and ENEL Societa 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 Consumers Energy and ENEL Societa into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Consumers Energy and ENEL Societa per, you can compare the effects of market volatilities on Consumers Energy and ENEL Societa 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 Consumers Energy with a short position of ENEL Societa. Check out your portfolio center. Please also check ongoing floating volatility patterns of Consumers Energy and ENEL Societa.
Diversification Opportunities for Consumers Energy and ENEL Societa
0.42 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Consumers and ENEL is 0.42. Overlapping area represents the amount of risk that can be diversified away by holding Consumers Energy and ENEL Societa per in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ENEL Societa per and Consumers Energy 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 Consumers Energy are associated (or correlated) with ENEL Societa. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of ENEL Societa per has no effect on the direction of Consumers Energy i.e., Consumers Energy and ENEL Societa go up and down completely randomly.
Pair Corralation between Consumers Energy and ENEL Societa
Assuming the 90 days trading horizon Consumers Energy is expected to generate 5.35 times less return on investment than ENEL Societa. In addition to that, Consumers Energy is 1.27 times more volatile than ENEL Societa per. It trades about 0.01 of its total potential returns per unit of risk. ENEL Societa per is currently generating about 0.07 per unit of volatility. If you would invest 478.00 in ENEL Societa per on September 2, 2024 and sell it today you would earn a total of 238.00 from holding ENEL Societa per or generate 49.79% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Consumers Energy vs. ENEL Societa per
Performance |
| Timeline |
| Consumers Energy |
| ENEL Societa per |
Consumers Energy and ENEL Societa Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Consumers Energy and ENEL Societa
The main advantage of trading using opposite Consumers Energy and ENEL Societa positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Consumers Energy position performs unexpectedly, ENEL Societa 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 Societa will offset losses from the drop in ENEL Societa's long position.| Consumers Energy vs. Nextera Energy | Consumers Energy vs. Duke Energy | Consumers Energy vs. PGE Corp | Consumers Energy vs. Southern Company |
| ENEL Societa vs. Nextera Energy | ENEL Societa vs. Consumers Energy | ENEL Societa vs. Duke Energy | ENEL Societa vs. Centrais Electricas Brasileiras |
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 Bonds Directory module to find actively traded corporate debentures issued by US companies.
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