Correlation Between Enel Chile and American Electric
Can any of the company-specific risk be diversified away by investing in both Enel Chile and American Electric 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 Chile and American Electric into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Enel Chile SA and American Electric Power, you can compare the effects of market volatilities on Enel Chile and American Electric 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 Chile with a short position of American Electric. Check out your portfolio center. Please also check ongoing floating volatility patterns of Enel Chile and American Electric.
Diversification Opportunities for Enel Chile and American Electric
-0.41 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Enel and American is -0.41. Overlapping area represents the amount of risk that can be diversified away by holding Enel Chile SA and American Electric Power in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on American Electric Power and Enel Chile 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 Chile SA are associated (or correlated) with American Electric. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of American Electric Power has no effect on the direction of Enel Chile i.e., Enel Chile and American Electric go up and down completely randomly.
Pair Corralation between Enel Chile and American Electric
Given the investment horizon of 90 days Enel Chile SA is expected to under-perform the American Electric. In addition to that, Enel Chile is 1.06 times more volatile than American Electric Power. It trades about -0.11 of its total potential returns per unit of risk. American Electric Power is currently generating about -0.01 per unit of volatility. If you would invest 9,815 in American Electric Power on August 27, 2024 and sell it today you would lose (56.00) from holding American Electric Power or give up 0.57% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Enel Chile SA vs. American Electric Power
Performance |
| Timeline |
| Enel Chile SA |
| American Electric Power |
Enel Chile and American Electric Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Enel Chile and American Electric
The main advantage of trading using opposite Enel Chile and American Electric positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Enel Chile position performs unexpectedly, American Electric 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 American Electric will offset losses from the drop in American Electric's long position.| Enel Chile vs. Dominion Energy | Enel Chile vs. Consolidated Edison | Enel Chile vs. Eversource Energy | Enel Chile vs. FirstEnergy |
| American Electric vs. Southern Company | American Electric vs. Dominion Energy | American Electric vs. Nextera Energy | American Electric vs. Consolidated Edison |
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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