Correlation Between ENDESA ADR and CENTRAL PUERTO
Can any of the company-specific risk be diversified away by investing in both ENDESA ADR 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 ADR 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 ADR 12 and CENTRAL PUERTO ADR1, you can compare the effects of market volatilities on ENDESA ADR 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 ADR with a short position of CENTRAL PUERTO. Check out your portfolio center. Please also check ongoing floating volatility patterns of ENDESA ADR and CENTRAL PUERTO.
Diversification Opportunities for ENDESA ADR and CENTRAL PUERTO
0.71 | Correlation Coefficient |
Poor diversification
The 3 months correlation between ENDESA and CENTRAL is 0.71. Overlapping area represents the amount of risk that can be diversified away by holding ENDESA ADR 12 and CENTRAL PUERTO ADR1 in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on CENTRAL PUERTO ADR1 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 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 ADR1 has no effect on the direction of ENDESA ADR i.e., ENDESA ADR and CENTRAL PUERTO go up and down completely randomly.
Pair Corralation between ENDESA ADR and CENTRAL PUERTO
Assuming the 90 days trading horizon ENDESA ADR is expected to generate 3.58 times less return on investment than CENTRAL PUERTO. But when comparing it to its historical volatility, ENDESA ADR 12 is 2.52 times less risky than CENTRAL PUERTO. It trades about 0.32 of its potential returns per unit of risk. CENTRAL PUERTO ADR1 is currently generating about 0.45 of returns per unit of risk over similar time horizon. If you would invest 1,047 in CENTRAL PUERTO ADR1 on September 12, 2024 and sell it today you would earn a total of 333.00 from holding CENTRAL PUERTO ADR1 or generate 31.81% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
ENDESA ADR 12 vs. CENTRAL PUERTO ADR1
Performance |
| Timeline |
| ENDESA ADR 12 |
| CENTRAL PUERTO ADR1 |
ENDESA ADR and CENTRAL PUERTO Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with ENDESA ADR and CENTRAL PUERTO
The main advantage of trading using opposite ENDESA ADR and CENTRAL PUERTO positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if ENDESA ADR 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 ADR vs. Kaiser Aluminum | ENDESA ADR vs. Columbia Sportswear | ENDESA ADR vs. ARDAGH METAL PACDL 0001 | ENDESA ADR vs. JD SPORTS FASH |
| CENTRAL PUERTO vs. China Communications Services | CENTRAL PUERTO vs. United Rentals | CENTRAL PUERTO vs. Iridium Communications | CENTRAL PUERTO vs. SK TELECOM TDADR |
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 Global Markets Map module to get a quick overview of global market snapshot using zoomable world map. Drill down to check world indexes.
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