Correlation Between BII Railway and Enel SpA
Can any of the company-specific risk be diversified away by investing in both BII Railway 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 BII Railway and Enel SpA into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between BII Railway Transportation and Enel SpA, you can compare the effects of market volatilities on BII Railway 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 BII Railway with a short position of Enel SpA. Check out your portfolio center. Please also check ongoing floating volatility patterns of BII Railway and Enel SpA.
Diversification Opportunities for BII Railway and Enel SpA
0.26 | Correlation Coefficient |
Modest diversification
The 3 months correlation between BII and Enel is 0.26. Overlapping area represents the amount of risk that can be diversified away by holding BII Railway Transportation and Enel SpA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Enel SpA and BII Railway 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 BII Railway Transportation 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 BII Railway i.e., BII Railway and Enel SpA go up and down completely randomly.
Pair Corralation between BII Railway and Enel SpA
Assuming the 90 days horizon BII Railway is expected to generate 1.03 times less return on investment than Enel SpA. In addition to that, BII Railway is 1.44 times more volatile than Enel SpA. It trades about 0.04 of its total potential returns per unit of risk. Enel SpA is currently generating about 0.06 per unit of volatility. If you would invest 648.00 in Enel SpA on January 7, 2025 and sell it today you would earn a total of 102.00 from holding Enel SpA or generate 15.74% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
BII Railway Transportation vs. Enel SpA
Performance |
| Timeline |
| BII Railway Transpor |
| Enel SpA |
BII Railway and Enel SpA Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with BII Railway and Enel SpA
The main advantage of trading using opposite BII Railway and Enel SpA positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if BII Railway 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.| BII Railway vs. De Grey Mining | BII Railway vs. Thai Beverage Public | BII Railway vs. Grupo Carso SAB | BII Railway vs. Monument Mining Limited |
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 CEOs Directory module to screen CEOs from public companies around the world.
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