Correlation Between Enel Amricas and Sociedad Matriz
Can any of the company-specific risk be diversified away by investing in both Enel Amricas and Sociedad Matriz 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 Enel Amricas and Sociedad Matriz into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Enel Amricas SA and Sociedad Matriz SAAM, you can compare the effects of market volatilities on Enel Amricas and Sociedad Matriz 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 Enel Amricas with a short position of Sociedad Matriz. Check out your portfolio center. Please also check ongoing floating volatility patterns of Enel Amricas and Sociedad Matriz.
Diversification Opportunities for Enel Amricas and Sociedad Matriz
-0.26 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Enel and Sociedad is -0.26. Overlapping area represents the amount of risk that can be diversified away by holding Enel Amricas SA and Sociedad Matriz SAAM in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Sociedad Matriz SAAM and Enel Amricas 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 Enel Amricas SA are associated (or correlated) with Sociedad Matriz. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Sociedad Matriz SAAM has no effect on the direction of Enel Amricas i.e., Enel Amricas and Sociedad Matriz go up and down completely randomly.
Pair Corralation between Enel Amricas and Sociedad Matriz
Assuming the 90 days trading horizon Enel Amricas SA is expected to under-perform the Sociedad Matriz. But the stock apears to be less risky and, when comparing its historical volatility, Enel Amricas SA is 1.54 times less risky than Sociedad Matriz. The stock trades about -0.17 of its potential returns per unit of risk. The Sociedad Matriz SAAM is currently generating about -0.01 of returns per unit of risk over similar time horizon. If you would invest 10,504 in Sociedad Matriz SAAM on August 28, 2024 and sell it today you would lose (54.00) from holding Sociedad Matriz SAAM or give up 0.51% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Enel Amricas SA vs. Sociedad Matriz SAAM
Performance |
| Timeline |
| Enel Amricas SA |
| Sociedad Matriz SAAM |
Enel Amricas and Sociedad Matriz Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Enel Amricas and Sociedad Matriz
The main advantage of trading using opposite Enel Amricas and Sociedad Matriz positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Enel Amricas position performs unexpectedly, Sociedad Matriz 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 Sociedad Matriz will offset losses from the drop in Sociedad Matriz's long position.| Enel Amricas vs. Empresas Copec SA | Enel Amricas vs. Banco Santander Chile | Enel Amricas vs. Falabella | Enel Amricas vs. Cencosud |
| Sociedad Matriz vs. Vapores | Sociedad Matriz vs. Empresas CMPC | Sociedad Matriz vs. Colbun | Sociedad Matriz vs. Empresas Copec SA |
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 Analyst Advice module to analyst recommendations and target price estimates broken down by several categories.
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