Correlation Between ENCE Energa and Lar Espana
Can any of the company-specific risk be diversified away by investing in both ENCE Energa and Lar Espana 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 ENCE Energa and Lar Espana into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between ENCE Energa y and Lar Espana Real, you can compare the effects of market volatilities on ENCE Energa and Lar Espana 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 ENCE Energa with a short position of Lar Espana. Check out your portfolio center. Please also check ongoing floating volatility patterns of ENCE Energa and Lar Espana.
Diversification Opportunities for ENCE Energa and Lar Espana
-0.49 | Correlation Coefficient |
Very good diversification
The 3 months correlation between ENCE and Lar is -0.49. Overlapping area represents the amount of risk that can be diversified away by holding ENCE Energa y and Lar Espana Real in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Lar Espana Real and ENCE Energa 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 ENCE Energa y are associated (or correlated) with Lar Espana. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Lar Espana Real has no effect on the direction of ENCE Energa i.e., ENCE Energa and Lar Espana go up and down completely randomly.
Pair Corralation between ENCE Energa and Lar Espana
Assuming the 90 days trading horizon ENCE Energa y is expected to generate 2.95 times more return on investment than Lar Espana. However, ENCE Energa is 2.95 times more volatile than Lar Espana Real. It trades about 0.01 of its potential returns per unit of risk. Lar Espana Real is currently generating about -0.08 per unit of risk. If you would invest 283.00 in ENCE Energa y on August 29, 2024 and sell it today you would earn a total of 0.00 from holding ENCE Energa y or generate 0.0% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
ENCE Energa y vs. Lar Espana Real
Performance |
| Timeline |
| ENCE Energa y |
| Lar Espana Real |
ENCE Energa and Lar Espana Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with ENCE Energa and Lar Espana
The main advantage of trading using opposite ENCE Energa and Lar Espana positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if ENCE Energa position performs unexpectedly, Lar Espana 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 Lar Espana will offset losses from the drop in Lar Espana's long position.| ENCE Energa vs. ACS Actividades de | ENCE Energa vs. ArcelorMittal SA | ENCE Energa vs. Mapfre | ENCE Energa vs. Ferrovial |
| Lar Espana vs. Mercal Inmuebles Socimi | Lar Espana vs. Metrovacesa SA | Lar Espana vs. Elecnor SA | Lar Espana vs. Mapfre |
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 Sign In To Macroaxis module to sign in to explore Macroaxis' wealth optimization platform and fintech modules.
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