Correlation Between Enel Chile and Genie Energy
Can any of the company-specific risk be diversified away by investing in both Enel Chile and Genie 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 Genie 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 Genie Energy, you can compare the effects of market volatilities on Enel Chile and Genie 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 Genie Energy. Check out your portfolio center. Please also check ongoing floating volatility patterns of Enel Chile and Genie Energy.
Diversification Opportunities for Enel Chile and Genie Energy
-0.36 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Enel and Genie is -0.36. Overlapping area represents the amount of risk that can be diversified away by holding Enel Chile SA and Genie Energy in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Genie 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 Genie Energy. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Genie Energy has no effect on the direction of Enel Chile i.e., Enel Chile and Genie Energy go up and down completely randomly.
Pair Corralation between Enel Chile and Genie Energy
Given the investment horizon of 90 days Enel Chile is expected to generate 1.11 times less return on investment than Genie Energy. But when comparing it to its historical volatility, Enel Chile SA is 1.29 times less risky than Genie Energy. It trades about 0.06 of its potential returns per unit of risk. Genie Energy is currently generating about 0.05 of returns per unit of risk over similar time horizon. If you would invest 992.00 in Genie Energy on August 24, 2024 and sell it today you would earn a total of 612.00 from holding Genie Energy or generate 61.69% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Enel Chile SA vs. Genie Energy
Performance |
| Timeline |
| Enel Chile SA |
| Genie Energy |
Enel Chile and Genie Energy Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Enel Chile and Genie Energy
The main advantage of trading using opposite Enel Chile and Genie Energy positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Enel Chile position performs unexpectedly, Genie 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 Genie Energy will offset losses from the drop in Genie 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 |
| Genie Energy vs. Centrais Electricas Brasileiras | Genie Energy vs. Central Puerto SA | Genie Energy vs. Korea Electric Power | Genie Energy vs. Empresa Distribuidora y |
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 Price Transformation module to use Price Transformation models to analyze the depth of different equity instruments across global markets.
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