Correlation Between Dominion Energy and Enel SpA
Can any of the company-specific risk be diversified away by investing in both Dominion Energy 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 Dominion Energy and Enel SpA into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Dominion Energy and Enel SpA, you can compare the effects of market volatilities on Dominion Energy 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 Dominion Energy with a short position of Enel SpA. Check out your portfolio center. Please also check ongoing floating volatility patterns of Dominion Energy and Enel SpA.
Diversification Opportunities for Dominion Energy and Enel SpA
-0.18 | Correlation Coefficient |
Good diversification
The 3 months correlation between Dominion and Enel is -0.18. Overlapping area represents the amount of risk that can be diversified away by holding Dominion Energy and Enel SpA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Enel SpA and Dominion 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 Dominion Energy 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 Dominion Energy i.e., Dominion Energy and Enel SpA go up and down completely randomly.
Pair Corralation between Dominion Energy and Enel SpA
Assuming the 90 days horizon Dominion Energy is expected to generate 1.42 times more return on investment than Enel SpA. However, Dominion Energy is 1.42 times more volatile than Enel SpA. It trades about 0.12 of its potential returns per unit of risk. Enel SpA is currently generating about 0.0 per unit of risk. If you would invest 4,972 in Dominion Energy on September 3, 2024 and sell it today you would earn a total of 589.00 from holding Dominion Energy or generate 11.85% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Dominion Energy vs. Enel SpA
Performance |
| Timeline |
| Dominion Energy |
| Enel SpA |
Dominion Energy and Enel SpA Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Dominion Energy and Enel SpA
The main advantage of trading using opposite Dominion Energy and Enel SpA positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Dominion Energy 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.| Dominion Energy vs. Choice Hotels International | Dominion Energy vs. Ping An Insurance | Dominion Energy vs. MELIA HOTELS | Dominion Energy vs. Dalata Hotel Group |
| Enel SpA vs. Pembina Pipeline Corp | Enel SpA vs. CN MODERN DAIRY | Enel SpA vs. American Eagle Outfitters | Enel SpA vs. Tyson Foods |
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 Headlines Timeline module to stay connected to all market stories and filter out noise. Drill down to analyze hype elasticity.
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