Correlation Between EnBW Energie and Avista
Can any of the company-specific risk be diversified away by investing in both EnBW Energie and Avista 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 EnBW Energie and Avista into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between EnBW Energie Baden Wrttemberg and Avista, you can compare the effects of market volatilities on EnBW Energie and Avista 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 EnBW Energie with a short position of Avista. Check out your portfolio center. Please also check ongoing floating volatility patterns of EnBW Energie and Avista.
Diversification Opportunities for EnBW Energie and Avista
0.42 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between EnBW and Avista is 0.42. Overlapping area represents the amount of risk that can be diversified away by holding EnBW Energie Baden Wrttemberg and Avista in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Avista and EnBW Energie 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 EnBW Energie Baden Wrttemberg are associated (or correlated) with Avista. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Avista has no effect on the direction of EnBW Energie i.e., EnBW Energie and Avista go up and down completely randomly.
Pair Corralation between EnBW Energie and Avista
Assuming the 90 days trading horizon EnBW Energie Baden Wrttemberg is expected to under-perform the Avista. In addition to that, EnBW Energie is 1.51 times more volatile than Avista. It trades about -0.02 of its total potential returns per unit of risk. Avista is currently generating about 0.01 per unit of volatility. If you would invest 3,609 in Avista on November 28, 2024 and sell it today you would earn a total of 31.00 from holding Avista or generate 0.86% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 95.41% |
| Values | Daily Returns |
EnBW Energie Baden Wrttemberg vs. Avista
Performance |
| Timeline |
| EnBW Energie Baden |
| Avista |
EnBW Energie and Avista Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with EnBW Energie and Avista
The main advantage of trading using opposite EnBW Energie and Avista positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if EnBW Energie position performs unexpectedly, Avista 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 Avista will offset losses from the drop in Avista's long position.| EnBW Energie vs. Gol Intelligent Airlines | EnBW Energie vs. SOUTHWEST AIRLINES | EnBW Energie vs. Singapore Airlines Limited | EnBW Energie vs. BJs Restaurants |
| Avista vs. 24SEVENOFFICE GROUP AB | Avista vs. COMM HEALTH SYSTEMS | Avista vs. MAVEN WIRELESS SWEDEN | Avista vs. OFFICE DEPOT |
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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