Correlation Between Inmobiliaria Colonial and ENCE Energa
Can any of the company-specific risk be diversified away by investing in both Inmobiliaria Colonial and ENCE Energa 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 Inmobiliaria Colonial and ENCE Energa into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Inmobiliaria Colonial SA and ENCE Energa y, you can compare the effects of market volatilities on Inmobiliaria Colonial and ENCE Energa 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 Inmobiliaria Colonial with a short position of ENCE Energa. Check out your portfolio center. Please also check ongoing floating volatility patterns of Inmobiliaria Colonial and ENCE Energa.
Diversification Opportunities for Inmobiliaria Colonial and ENCE Energa
0.3 | Correlation Coefficient |
Weak diversification
The 3 months correlation between Inmobiliaria and ENCE is 0.3. Overlapping area represents the amount of risk that can be diversified away by holding Inmobiliaria Colonial SA and ENCE Energa y in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ENCE Energa y and Inmobiliaria Colonial 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 Inmobiliaria Colonial SA are associated (or correlated) with ENCE Energa. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of ENCE Energa y has no effect on the direction of Inmobiliaria Colonial i.e., Inmobiliaria Colonial and ENCE Energa go up and down completely randomly.
Pair Corralation between Inmobiliaria Colonial and ENCE Energa
Assuming the 90 days trading horizon Inmobiliaria Colonial SA is expected to generate 1.08 times more return on investment than ENCE Energa. However, Inmobiliaria Colonial is 1.08 times more volatile than ENCE Energa y. It trades about 0.01 of its potential returns per unit of risk. ENCE Energa y is currently generating about -0.01 per unit of risk. If you would invest 531.00 in Inmobiliaria Colonial SA on August 29, 2024 and sell it today you would earn a total of 16.00 from holding Inmobiliaria Colonial SA or generate 3.01% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Inmobiliaria Colonial SA vs. ENCE Energa y
Performance |
| Timeline |
| Inmobiliaria Colonial |
| ENCE Energa y |
Inmobiliaria Colonial and ENCE Energa Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Inmobiliaria Colonial and ENCE Energa
The main advantage of trading using opposite Inmobiliaria Colonial and ENCE Energa positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Inmobiliaria Colonial position performs unexpectedly, ENCE Energa 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 ENCE Energa will offset losses from the drop in ENCE Energa's long position.The idea behind Inmobiliaria Colonial SA and ENCE Energa y pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.| ENCE Energa vs. ACS Actividades de | ENCE Energa vs. ArcelorMittal SA | ENCE Energa vs. Mapfre | ENCE Energa vs. Ferrovial |
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 File Import module to quickly import all of your third-party portfolios from your local drive in csv format.
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