Correlation Between Enel Chile and Algonquin Power
Can any of the company-specific risk be diversified away by investing in both Enel Chile and Algonquin Power 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 Algonquin Power 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 Algonquin Power Utilities, you can compare the effects of market volatilities on Enel Chile and Algonquin Power 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 Algonquin Power. Check out your portfolio center. Please also check ongoing floating volatility patterns of Enel Chile and Algonquin Power.
Diversification Opportunities for Enel Chile and Algonquin Power
-0.65 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Enel and Algonquin is -0.65. Overlapping area represents the amount of risk that can be diversified away by holding Enel Chile SA and Algonquin Power Utilities in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Algonquin Power Utilities 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 Algonquin Power. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Algonquin Power Utilities has no effect on the direction of Enel Chile i.e., Enel Chile and Algonquin Power go up and down completely randomly.
Pair Corralation between Enel Chile and Algonquin Power
Given the investment horizon of 90 days Enel Chile SA is expected to generate 0.7 times more return on investment than Algonquin Power. However, Enel Chile SA is 1.42 times less risky than Algonquin Power. It trades about 0.36 of its potential returns per unit of risk. Algonquin Power Utilities is currently generating about 0.03 per unit of risk. If you would invest 290.00 in Enel Chile SA on November 9, 2024 and sell it today you would earn a total of 31.00 from holding Enel Chile SA or generate 10.69% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Enel Chile SA vs. Algonquin Power Utilities
Performance |
| Timeline |
| Enel Chile SA |
| Algonquin Power Utilities |
Enel Chile and Algonquin Power Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Enel Chile and Algonquin Power
The main advantage of trading using opposite Enel Chile and Algonquin Power positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Enel Chile position performs unexpectedly, Algonquin Power 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 Algonquin Power will offset losses from the drop in Algonquin Power's long position.| Enel Chile vs. Centrais Eltricas Brasileiras | Enel Chile vs. Korea Electric Power | Enel Chile vs. Central Puerto SA | Enel Chile vs. CMS Energy |
| Algonquin Power vs. Brookfield Renewable Corp | Algonquin Power vs. Nextera Energy Partners | Algonquin Power vs. Clearway Energy Class | Algonquin Power vs. Clearway Energy |
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 Alpha Finder module to use alpha and beta coefficients to find investment opportunities after accounting for the risk.
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