Correlation Between Enel Chile and Entergy
Can any of the company-specific risk be diversified away by investing in both Enel Chile and Entergy 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 Entergy 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 Entergy, you can compare the effects of market volatilities on Enel Chile and Entergy 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 Entergy. Check out your portfolio center. Please also check ongoing floating volatility patterns of Enel Chile and Entergy.
Diversification Opportunities for Enel Chile and Entergy
0.68 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Enel and Entergy is 0.68. Overlapping area represents the amount of risk that can be diversified away by holding Enel Chile SA and Entergy in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Entergy 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 Entergy. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Entergy has no effect on the direction of Enel Chile i.e., Enel Chile and Entergy go up and down completely randomly.
Pair Corralation between Enel Chile and Entergy
Given the investment horizon of 90 days Enel Chile is expected to generate 2.39 times less return on investment than Entergy. In addition to that, Enel Chile is 1.2 times more volatile than Entergy. It trades about 0.05 of its total potential returns per unit of risk. Entergy is currently generating about 0.14 per unit of volatility. If you would invest 4,803 in Entergy on November 9, 2024 and sell it today you would earn a total of 3,476 from holding Entergy or generate 72.37% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Enel Chile SA vs. Entergy
Performance |
| Timeline |
| Enel Chile SA |
| Entergy |
Enel Chile and Entergy Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Enel Chile and Entergy
The main advantage of trading using opposite Enel Chile and Entergy positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Enel Chile position performs unexpectedly, Entergy 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 Entergy will offset losses from the drop in Entergy'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 |
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 Watchlist Optimization module to optimize watchlists to build efficient portfolios or rebalance existing positions based on the mean-variance optimization algorithm.
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