Correlation Between Enel Chile and Centrais Elétricas
Can any of the company-specific risk be diversified away by investing in both Enel Chile and Centrais Elétricas 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 Centrais Elétricas 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 Centrais Eltricas Brasileiras, you can compare the effects of market volatilities on Enel Chile and Centrais Elétricas 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 Centrais Elétricas. Check out your portfolio center. Please also check ongoing floating volatility patterns of Enel Chile and Centrais Elétricas.
Diversification Opportunities for Enel Chile and Centrais Elétricas
-0.32 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Enel and Centrais is -0.32. Overlapping area represents the amount of risk that can be diversified away by holding Enel Chile SA and Centrais Eltricas Brasileiras in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Centrais Elétricas 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 Centrais Elétricas. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Centrais Elétricas has no effect on the direction of Enel Chile i.e., Enel Chile and Centrais Elétricas go up and down completely randomly.
Pair Corralation between Enel Chile and Centrais Elétricas
Given the investment horizon of 90 days Enel Chile SA is expected to generate 0.97 times more return on investment than Centrais Elétricas. However, Enel Chile SA is 1.03 times less risky than Centrais Elétricas. It trades about -0.11 of its potential returns per unit of risk. Centrais Eltricas Brasileiras is currently generating about -0.19 per unit of risk. If you would invest 282.00 in Enel Chile SA on August 27, 2024 and sell it today you would lose (11.00) from holding Enel Chile SA or give up 3.9% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Enel Chile SA vs. Centrais Eltricas Brasileiras
Performance |
| Timeline |
| Enel Chile SA |
| Centrais Elétricas |
Enel Chile and Centrais Elétricas Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Enel Chile and Centrais Elétricas
The main advantage of trading using opposite Enel Chile and Centrais Elétricas positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Enel Chile position performs unexpectedly, Centrais Elétricas 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 Centrais Elétricas will offset losses from the drop in Centrais Elétricas' long position.| Enel Chile vs. Dominion Energy | Enel Chile vs. Consolidated Edison | Enel Chile vs. Eversource Energy | Enel Chile vs. FirstEnergy |
| Centrais Elétricas vs. Nextera Energy | Centrais Elétricas vs. Consumers Energy | Centrais Elétricas vs. Duke Energy | Centrais Elétricas vs. Red Electrica Corporacion |
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 Portfolio File Import module to quickly import all of your third-party portfolios from your local drive in csv format.
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