Correlation Between Enel Chile and National Grid
Can any of the company-specific risk be diversified away by investing in both Enel Chile and National Grid 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 National Grid 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 National Grid PLC, you can compare the effects of market volatilities on Enel Chile and National Grid 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 National Grid. Check out your portfolio center. Please also check ongoing floating volatility patterns of Enel Chile and National Grid.
Diversification Opportunities for Enel Chile and National Grid
-0.35 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Enel and National is -0.35. Overlapping area represents the amount of risk that can be diversified away by holding Enel Chile SA and National Grid PLC in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on National Grid PLC 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 National Grid. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of National Grid PLC has no effect on the direction of Enel Chile i.e., Enel Chile and National Grid go up and down completely randomly.
Pair Corralation between Enel Chile and National Grid
Given the investment horizon of 90 days Enel Chile SA is expected to generate 0.85 times more return on investment than National Grid. However, Enel Chile SA is 1.18 times less risky than National Grid. It trades about 0.36 of its potential returns per unit of risk. National Grid PLC is currently generating about 0.19 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 | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Enel Chile SA vs. National Grid PLC
Performance |
| Timeline |
| Enel Chile SA |
| National Grid PLC |
Enel Chile and National Grid Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Enel Chile and National Grid
The main advantage of trading using opposite Enel Chile and National Grid positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Enel Chile position performs unexpectedly, National Grid 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 National Grid will offset losses from the drop in National Grid'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 |
| National Grid vs. Southern Company | National Grid vs. Edison International | National Grid vs. American Electric Power | National Grid vs. Duke 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 Idea Analyzer module to analyze all characteristics, volatility and risk-adjusted return of Macroaxis ideas.
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