Correlation Between Endesa SA and Central Puerto
Can any of the company-specific risk be diversified away by investing in both Endesa SA and Central Puerto 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 Endesa SA and Central Puerto into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Endesa SA ADR and Central Puerto SA, you can compare the effects of market volatilities on Endesa SA and Central Puerto 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 Endesa SA with a short position of Central Puerto. Check out your portfolio center. Please also check ongoing floating volatility patterns of Endesa SA and Central Puerto.
Diversification Opportunities for Endesa SA and Central Puerto
0.44 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Endesa and Central is 0.44. Overlapping area represents the amount of risk that can be diversified away by holding Endesa SA ADR and Central Puerto SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Central Puerto SA and Endesa SA 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 Endesa SA ADR are associated (or correlated) with Central Puerto. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Central Puerto SA has no effect on the direction of Endesa SA i.e., Endesa SA and Central Puerto go up and down completely randomly.
Pair Corralation between Endesa SA and Central Puerto
Assuming the 90 days horizon Endesa SA ADR is expected to generate 0.36 times more return on investment than Central Puerto. However, Endesa SA ADR is 2.75 times less risky than Central Puerto. It trades about 0.14 of its potential returns per unit of risk. Central Puerto SA is currently generating about -0.03 per unit of risk. If you would invest 1,077 in Endesa SA ADR on October 26, 2024 and sell it today you would earn a total of 36.00 from holding Endesa SA ADR or generate 3.34% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 94.74% |
| Values | Daily Returns |
Endesa SA ADR vs. Central Puerto SA
Performance |
| Timeline |
| Endesa SA ADR |
| Central Puerto SA |
Endesa SA and Central Puerto Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Endesa SA and Central Puerto
The main advantage of trading using opposite Endesa SA and Central Puerto positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Endesa SA position performs unexpectedly, Central Puerto 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 Central Puerto will offset losses from the drop in Central Puerto's long position.| Endesa SA vs. Equatorial Energia SA | Endesa SA vs. Centrais Electricas Brasileiras | Endesa SA vs. Entergy Texas | Endesa SA vs. IDACORP |
| Central Puerto vs. Korea Electric Power | Central Puerto vs. Centrais Electricas Brasileiras | Central Puerto vs. MGE Energy | Central Puerto vs. IDACORP |
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 Price Ceiling Movement module to calculate and plot Price Ceiling Movement for different equity instruments.
Other Complementary Tools
| Insider Screener Find insiders across different sectors to evaluate their impact on performance | |
| Pattern Recognition Use different Pattern Recognition models to time the market across multiple global exchanges | |
| Equity Search Search for actively traded equities including funds and ETFs from over 30 global markets | |
| Analyst Advice Analyst recommendations and target price estimates broken down by several categories | |
| Stocks Directory Find actively traded stocks across global markets |