Correlation Between Consolidated Edison and Enel Chile
Can any of the company-specific risk be diversified away by investing in both Consolidated Edison 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 Consolidated Edison and Enel Chile into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Consolidated Edison and Enel Chile SA, you can compare the effects of market volatilities on Consolidated Edison 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 Consolidated Edison with a short position of Enel Chile. Check out your portfolio center. Please also check ongoing floating volatility patterns of Consolidated Edison and Enel Chile.
Diversification Opportunities for Consolidated Edison and Enel Chile
-0.12 | Correlation Coefficient |
Good diversification
The 3 months correlation between Consolidated and Enel is -0.12. Overlapping area represents the amount of risk that can be diversified away by holding Consolidated Edison 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 Consolidated Edison 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 Consolidated Edison 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 Consolidated Edison i.e., Consolidated Edison and Enel Chile go up and down completely randomly.
Pair Corralation between Consolidated Edison and Enel Chile
Allowing for the 90-day total investment horizon Consolidated Edison is expected to generate 0.65 times more return on investment than Enel Chile. However, Consolidated Edison is 1.55 times less risky than Enel Chile. It trades about -0.01 of its potential returns per unit of risk. Enel Chile SA is currently generating about -0.03 per unit of risk. If you would invest 10,184 in Consolidated Edison on August 31, 2024 and sell it today you would lose (26.00) from holding Consolidated Edison or give up 0.26% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Consolidated Edison vs. Enel Chile SA
Performance |
| Timeline |
| Consolidated Edison |
| Enel Chile SA |
Consolidated Edison and Enel Chile Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Consolidated Edison and Enel Chile
The main advantage of trading using opposite Consolidated Edison and Enel Chile positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Consolidated Edison 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.| Consolidated Edison vs. Duke Energy | Consolidated Edison vs. Dominion Energy | Consolidated Edison vs. American Electric Power | Consolidated Edison vs. Nextera Energy |
| 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 Portfolio Center module to all portfolio management and optimization tools to improve performance of your portfolios.
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