Correlation Between Global Dominion and ENCE Energa
Can any of the company-specific risk be diversified away by investing in both Global Dominion 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 Global Dominion and ENCE Energa into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Global Dominion Access and ENCE Energa y, you can compare the effects of market volatilities on Global Dominion 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 Global Dominion with a short position of ENCE Energa. Check out your portfolio center. Please also check ongoing floating volatility patterns of Global Dominion and ENCE Energa.
Diversification Opportunities for Global Dominion and ENCE Energa
0.59 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Global and ENCE is 0.59. Overlapping area represents the amount of risk that can be diversified away by holding Global Dominion Access 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 Global Dominion 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 Global Dominion Access 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 Global Dominion i.e., Global Dominion and ENCE Energa go up and down completely randomly.
Pair Corralation between Global Dominion and ENCE Energa
Assuming the 90 days trading horizon Global Dominion Access is expected to under-perform the ENCE Energa. But the stock apears to be less risky and, when comparing its historical volatility, Global Dominion Access is 1.06 times less risky than ENCE Energa. The stock trades about -0.04 of its potential returns per unit of risk. The ENCE Energa y is currently generating about 0.0 of returns per unit of risk over similar time horizon. If you would invest 284.00 in ENCE Energa y on September 2, 2024 and sell it today you would lose (8.00) from holding ENCE Energa y or give up 2.82% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Global Dominion Access vs. ENCE Energa y
Performance |
| Timeline |
| Global Dominion Access |
| ENCE Energa y |
Global Dominion and ENCE Energa Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Global Dominion and ENCE Energa
The main advantage of trading using opposite Global Dominion and ENCE Energa positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Global Dominion 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.| Global Dominion vs. CIE Automotive SA | Global Dominion vs. Gestamp Automocion SA | Global Dominion vs. Vidrala SA | Global Dominion vs. Miquel y Costas |
| ENCE Energa vs. Acerinox | ENCE Energa vs. CIE Automotive SA | ENCE Energa vs. Mapfre | ENCE Energa vs. ArcelorMittal SA |
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 Bollinger Bands module to use Bollinger Bands indicator to analyze target price for a given investing horizon.
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