Correlation Between Engie Energia and Colbun
Can any of the company-specific risk be diversified away by investing in both Engie Energia and Colbun 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 Engie Energia and Colbun into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Engie Energia Chile and Colbun, you can compare the effects of market volatilities on Engie Energia and Colbun 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 Engie Energia with a short position of Colbun. Check out your portfolio center. Please also check ongoing floating volatility patterns of Engie Energia and Colbun.
Diversification Opportunities for Engie Energia and Colbun
-0.21 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Engie and Colbun is -0.21. Overlapping area represents the amount of risk that can be diversified away by holding Engie Energia Chile and Colbun in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Colbun and Engie Energia 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 Engie Energia Chile are associated (or correlated) with Colbun. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Colbun has no effect on the direction of Engie Energia i.e., Engie Energia and Colbun go up and down completely randomly.
Pair Corralation between Engie Energia and Colbun
Assuming the 90 days trading horizon Engie Energia Chile is expected to generate 1.01 times more return on investment than Colbun. However, Engie Energia is 1.01 times more volatile than Colbun. It trades about 0.09 of its potential returns per unit of risk. Colbun is currently generating about 0.08 per unit of risk. If you would invest 48,576 in Engie Energia Chile on September 24, 2024 and sell it today you would earn a total of 41,223 from holding Engie Energia Chile or generate 84.86% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Engie Energia Chile vs. Colbun
Performance |
| Timeline |
| Engie Energia Chile |
| Colbun |
Engie Energia and Colbun Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Engie Energia and Colbun
The main advantage of trading using opposite Engie Energia and Colbun positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Engie Energia position performs unexpectedly, Colbun 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 Colbun will offset losses from the drop in Colbun's long position.| Engie Energia vs. Colbun | Engie Energia vs. Enel Chile SA | Engie Energia vs. CAP SA | Engie Energia vs. Enel Amricas SA |
| Colbun vs. Administradora Americana de | Colbun vs. Energia Latina SA | Colbun vs. Embotelladora Andina SA | Colbun vs. Las Condes |
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 Holdings module to check your current holdings and cash postion to detemine if your portfolio needs rebalancing.
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