Correlation Between ENCE Energa and Sacyr SA
Can any of the company-specific risk be diversified away by investing in both ENCE Energa and Sacyr SA 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 Sacyr SA 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 Sacyr SA, you can compare the effects of market volatilities on ENCE Energa and Sacyr SA 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 Sacyr SA. Check out your portfolio center. Please also check ongoing floating volatility patterns of ENCE Energa and Sacyr SA.
Diversification Opportunities for ENCE Energa and Sacyr SA
0.55 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between ENCE and Sacyr is 0.55. Overlapping area represents the amount of risk that can be diversified away by holding ENCE Energa y and Sacyr SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Sacyr SA 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 Sacyr SA. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Sacyr SA has no effect on the direction of ENCE Energa i.e., ENCE Energa and Sacyr SA go up and down completely randomly.
Pair Corralation between ENCE Energa and Sacyr SA
Assuming the 90 days trading horizon ENCE Energa y is expected to generate 1.15 times more return on investment than Sacyr SA. However, ENCE Energa is 1.15 times more volatile than Sacyr SA. It trades about 0.01 of its potential returns per unit of risk. Sacyr SA is currently generating about -0.08 per unit of risk. If you would invest 283.00 in ENCE Energa y on August 28, 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 Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
ENCE Energa y vs. Sacyr SA
Performance |
| Timeline |
| ENCE Energa y |
| Sacyr SA |
ENCE Energa and Sacyr SA Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with ENCE Energa and Sacyr SA
The main advantage of trading using opposite ENCE Energa and Sacyr SA positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if ENCE Energa position performs unexpectedly, Sacyr SA 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 Sacyr SA will offset losses from the drop in Sacyr SA's long position.| ENCE Energa vs. ACS Actividades de | ENCE Energa vs. ArcelorMittal SA | ENCE Energa vs. Mapfre | ENCE Energa vs. Ferrovial |
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 Idea Breakdown module to analyze constituents of all Macroaxis ideas. Macroaxis investment ideas are predefined, sector-focused investing themes.
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