Correlation Between Endesa SA and IDACORP
Can any of the company-specific risk be diversified away by investing in both Endesa SA and IDACORP 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 IDACORP 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 IDACORP, you can compare the effects of market volatilities on Endesa SA and IDACORP 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 IDACORP. Check out your portfolio center. Please also check ongoing floating volatility patterns of Endesa SA and IDACORP.
Diversification Opportunities for Endesa SA and IDACORP
Significant diversification
The 3 months correlation between Endesa and IDACORP is 0.03. Overlapping area represents the amount of risk that can be diversified away by holding Endesa SA ADR and IDACORP in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on IDACORP 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 IDACORP. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of IDACORP has no effect on the direction of Endesa SA i.e., Endesa SA and IDACORP go up and down completely randomly.
Pair Corralation between Endesa SA and IDACORP
Assuming the 90 days horizon Endesa SA ADR is expected to generate 0.88 times more return on investment than IDACORP. However, Endesa SA ADR is 1.14 times less risky than IDACORP. It trades about 0.14 of its potential returns per unit of risk. IDACORP 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 | Insignificant |
| Accuracy | 94.74% |
| Values | Daily Returns |
Endesa SA ADR vs. IDACORP
Performance |
| Timeline |
| Endesa SA ADR |
| IDACORP |
Endesa SA and IDACORP Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Endesa SA and IDACORP
The main advantage of trading using opposite Endesa SA and IDACORP positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Endesa SA position performs unexpectedly, IDACORP 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 IDACORP will offset losses from the drop in IDACORP's long position.| Endesa SA vs. Equatorial Energia SA | Endesa SA vs. Centrais Electricas Brasileiras | Endesa SA vs. Entergy Texas | Endesa SA vs. IDACORP |
| IDACORP vs. CMS Energy | IDACORP vs. Pinnacle West Capital | IDACORP vs. Alliant Energy Corp | IDACORP vs. Portland General Electric |
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 Bond Analysis module to evaluate and analyze corporate bonds as a potential investment for your portfolios..
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