Correlation Between ENDESA ADR/ and GAZTRTECHNIUADR1/5EO01
Can any of the company-specific risk be diversified away by investing in both ENDESA ADR/ and GAZTRTECHNIUADR1/5EO01 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 ADR/ and GAZTRTECHNIUADR1/5EO01 into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between ENDESA ADR 12 and GAZTRTECHNIUADR15EO01, you can compare the effects of market volatilities on ENDESA ADR/ and GAZTRTECHNIUADR1/5EO01 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 ADR/ with a short position of GAZTRTECHNIUADR1/5EO01. Check out your portfolio center. Please also check ongoing floating volatility patterns of ENDESA ADR/ and GAZTRTECHNIUADR1/5EO01.
Diversification Opportunities for ENDESA ADR/ and GAZTRTECHNIUADR1/5EO01
0.57 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between ENDESA and GAZTRTECHNIUADR1/5EO01 is 0.57. Overlapping area represents the amount of risk that can be diversified away by holding ENDESA ADR 12 and GAZTRTECHNIUADR15EO01 in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on GAZTRTECHNIUADR1/5EO01 and ENDESA ADR/ 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 ADR 12 are associated (or correlated) with GAZTRTECHNIUADR1/5EO01. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of GAZTRTECHNIUADR1/5EO01 has no effect on the direction of ENDESA ADR/ i.e., ENDESA ADR/ and GAZTRTECHNIUADR1/5EO01 go up and down completely randomly.
Pair Corralation between ENDESA ADR/ and GAZTRTECHNIUADR1/5EO01
Assuming the 90 days trading horizon ENDESA ADR/ is expected to generate 1.76 times less return on investment than GAZTRTECHNIUADR1/5EO01. But when comparing it to its historical volatility, ENDESA ADR 12 is 1.52 times less risky than GAZTRTECHNIUADR1/5EO01. It trades about 0.17 of its potential returns per unit of risk. GAZTRTECHNIUADR15EO01 is currently generating about 0.2 of returns per unit of risk over similar time horizon. If you would invest 2,640 in GAZTRTECHNIUADR15EO01 on November 4, 2024 and sell it today you would earn a total of 220.00 from holding GAZTRTECHNIUADR15EO01 or generate 8.33% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
ENDESA ADR 12 vs. GAZTRTECHNIUADR15EO01
Performance |
| Timeline |
| ENDESA ADR 12 |
| GAZTRTECHNIUADR1/5EO01 |
ENDESA ADR/ and GAZTRTECHNIUADR1/5EO01 Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with ENDESA ADR/ and GAZTRTECHNIUADR1/5EO01
The main advantage of trading using opposite ENDESA ADR/ and GAZTRTECHNIUADR1/5EO01 positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if ENDESA ADR/ position performs unexpectedly, GAZTRTECHNIUADR1/5EO01 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 GAZTRTECHNIUADR1/5EO01 will offset losses from the drop in GAZTRTECHNIUADR1/5EO01's long position.| ENDESA ADR/ vs. SBM OFFSHORE | ENDESA ADR/ vs. WT OFFSHORE | ENDESA ADR/ vs. Extra Space Storage | ENDESA ADR/ vs. INFORMATION SVC GRP |
| GAZTRTECHNIUADR1/5EO01 vs. Apple Inc | GAZTRTECHNIUADR1/5EO01 vs. Apple Inc | GAZTRTECHNIUADR1/5EO01 vs. Apple Inc | GAZTRTECHNIUADR1/5EO01 vs. Apple Inc |
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 Exposure Probability module to analyze equity upside and downside potential for a given time horizon across multiple markets.
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