Correlation Between Centrais Elétricas and Enel Chile
Can any of the company-specific risk be diversified away by investing in both Centrais Elétricas and Enel Chile 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 Centrais Elétricas and Enel Chile into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Centrais Eltricas Brasileiras and Enel Chile SA, you can compare the effects of market volatilities on Centrais Elétricas and Enel Chile 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 Centrais Elétricas with a short position of Enel Chile. Check out your portfolio center. Please also check ongoing floating volatility patterns of Centrais Elétricas and Enel Chile.
Diversification Opportunities for Centrais Elétricas and Enel Chile
-0.28 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Centrais and Enel is -0.28. Overlapping area represents the amount of risk that can be diversified away by holding Centrais Eltricas Brasileiras and Enel Chile SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Enel Chile SA and Centrais Elétricas 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 Centrais Eltricas Brasileiras are associated (or correlated) with Enel Chile. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Enel Chile SA has no effect on the direction of Centrais Elétricas i.e., Centrais Elétricas and Enel Chile go up and down completely randomly.
Pair Corralation between Centrais Elétricas and Enel Chile
Assuming the 90 days horizon Centrais Eltricas Brasileiras is expected to under-perform the Enel Chile. In addition to that, Centrais Elétricas is 1.09 times more volatile than Enel Chile SA. It trades about -0.2 of its total potential returns per unit of risk. Enel Chile SA is currently generating about 0.03 per unit of volatility. If you would invest 278.00 in Enel Chile SA on August 24, 2024 and sell it today you would earn a total of 2.00 from holding Enel Chile SA or generate 0.72% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Centrais Eltricas Brasileiras vs. Enel Chile SA
Performance |
| Timeline |
| Centrais Elétricas |
| Enel Chile SA |
Centrais Elétricas and Enel Chile Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Centrais Elétricas and Enel Chile
The main advantage of trading using opposite Centrais Elétricas and Enel Chile positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Centrais Elétricas position performs unexpectedly, Enel Chile 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 Chile will offset losses from the drop in Enel Chile's long position.| Centrais Elétricas vs. Nextera Energy | Centrais Elétricas vs. Consumers Energy | Centrais Elétricas vs. Duke Energy | Centrais Elétricas vs. Red Electrica Corporacion |
| Enel Chile vs. Centrais Eltricas Brasileiras | Enel Chile vs. Korea Electric Power | Enel Chile vs. Central Puerto SA | Enel Chile vs. CMS Energy |
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 Risk-Return Analysis module to view associations between returns expected from investment and the risk you assume.
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