Correlation Between Enel Chile and Red Electrica
Can any of the company-specific risk be diversified away by investing in both Enel Chile and Red Electrica 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 Red Electrica 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 Red Electrica Corporacion, you can compare the effects of market volatilities on Enel Chile and Red Electrica 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 Red Electrica. Check out your portfolio center. Please also check ongoing floating volatility patterns of Enel Chile and Red Electrica.
Diversification Opportunities for Enel Chile and Red Electrica
-0.65 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Enel and Red is -0.65. Overlapping area represents the amount of risk that can be diversified away by holding Enel Chile SA and Red Electrica Corporacion in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Red Electrica Corporacion 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 Red Electrica. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Red Electrica Corporacion has no effect on the direction of Enel Chile i.e., Enel Chile and Red Electrica go up and down completely randomly.
Pair Corralation between Enel Chile and Red Electrica
Given the investment horizon of 90 days Enel Chile SA is expected to generate 1.75 times more return on investment than Red Electrica. However, Enel Chile is 1.75 times more volatile than Red Electrica Corporacion. It trades about 0.06 of its potential returns per unit of risk. Red Electrica Corporacion is currently generating about 0.01 per unit of risk. If you would invest 184.00 in Enel Chile SA on October 25, 2024 and sell it today you would earn a total of 114.00 from holding Enel Chile SA or generate 61.96% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Enel Chile SA vs. Red Electrica Corporacion
Performance |
| Timeline |
| Enel Chile SA |
| Red Electrica Corporacion |
Enel Chile and Red Electrica Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Enel Chile and Red Electrica
The main advantage of trading using opposite Enel Chile and Red Electrica positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Enel Chile position performs unexpectedly, Red Electrica 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 Red Electrica will offset losses from the drop in Red Electrica'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 |
| Red Electrica vs. Engie Brasil Energia | Red Electrica vs. Centrais Eltricas Brasileiras | Red Electrica vs. Centrais Electricas Brasileiras | Red Electrica vs. Ameren Corp |
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 Earnings Calls module to check upcoming earnings announcements updated hourly across public exchanges.
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