Correlation Between Enel Chile and CMS Energy
Can any of the company-specific risk be diversified away by investing in both Enel Chile and CMS Energy 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 CMS Energy 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 CMS Energy, you can compare the effects of market volatilities on Enel Chile and CMS Energy 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 CMS Energy. Check out your portfolio center. Please also check ongoing floating volatility patterns of Enel Chile and CMS Energy.
Diversification Opportunities for Enel Chile and CMS Energy
0.2 | Correlation Coefficient |
Modest diversification
The 3 months correlation between Enel and CMS is 0.2. Overlapping area represents the amount of risk that can be diversified away by holding Enel Chile SA and CMS Energy in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on CMS Energy 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 CMS Energy. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of CMS Energy has no effect on the direction of Enel Chile i.e., Enel Chile and CMS Energy go up and down completely randomly.
Pair Corralation between Enel Chile and CMS Energy
Given the investment horizon of 90 days Enel Chile SA is expected to generate 1.62 times more return on investment than CMS Energy. However, Enel Chile is 1.62 times more volatile than CMS Energy. It trades about -0.03 of its potential returns per unit of risk. CMS Energy is currently generating about -0.09 per unit of risk. If you would invest 272.00 in Enel Chile SA on August 31, 2024 and sell it today you would lose (3.00) from holding Enel Chile SA or give up 1.1% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Enel Chile SA vs. CMS Energy
Performance |
| Timeline |
| Enel Chile SA |
| CMS Energy |
Enel Chile and CMS Energy Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Enel Chile and CMS Energy
The main advantage of trading using opposite Enel Chile and CMS Energy positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Enel Chile position performs unexpectedly, CMS Energy 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 CMS Energy will offset losses from the drop in CMS Energy'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 |
| CMS Energy vs. Entergy Texas | CMS Energy vs. Duke Energy | CMS Energy vs. Spire Inc | CMS Energy vs. Consumers 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 Money Flow Index module to determine momentum by analyzing Money Flow Index and other technical indicators.
Other Complementary Tools
| Economic Indicators Top statistical indicators that provide insights into how an economy is performing | |
| Fundamentals Comparison Compare fundamentals across multiple equities to find investing opportunities | |
| Equity Valuation Check real value of public entities based on technical and fundamental data | |
| Premium Stories Follow Macroaxis premium stories from verified contributors across different equity types, categories and coverage scope | |
| AI Portfolio Architect Use AI to generate optimal portfolios and find profitable investment opportunities |