Correlation Between Enel Chile and Transportadora
Can any of the company-specific risk be diversified away by investing in both Enel Chile and Transportadora 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 Transportadora 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 Transportadora de Gas, you can compare the effects of market volatilities on Enel Chile and Transportadora 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 Transportadora. Check out your portfolio center. Please also check ongoing floating volatility patterns of Enel Chile and Transportadora.
Diversification Opportunities for Enel Chile and Transportadora
0.44 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Enel and Transportadora is 0.44. Overlapping area represents the amount of risk that can be diversified away by holding Enel Chile SA and Transportadora de Gas in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Transportadora de Gas 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 Transportadora. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Transportadora de Gas has no effect on the direction of Enel Chile i.e., Enel Chile and Transportadora go up and down completely randomly.
Pair Corralation between Enel Chile and Transportadora
Given the investment horizon of 90 days Enel Chile is expected to generate 2.6 times less return on investment than Transportadora. But when comparing it to its historical volatility, Enel Chile SA is 1.67 times less risky than Transportadora. It trades about 0.05 of its potential returns per unit of risk. Transportadora de Gas is currently generating about 0.08 of returns per unit of risk over similar time horizon. If you would invest 1,074 in Transportadora de Gas on October 13, 2024 and sell it today you would earn a total of 2,121 from holding Transportadora de Gas or generate 197.49% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Enel Chile SA vs. Transportadora de Gas
Performance |
| Timeline |
| Enel Chile SA |
| Transportadora de Gas |
Enel Chile and Transportadora Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Enel Chile and Transportadora
The main advantage of trading using opposite Enel Chile and Transportadora positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Enel Chile position performs unexpectedly, Transportadora 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 Transportadora will offset losses from the drop in Transportadora'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 |
| Transportadora vs. Petroleo Brasileiro Petrobras | Transportadora vs. Ecopetrol SA ADR | Transportadora vs. Petrleo Brasileiro SA | Transportadora vs. Equinor ASA ADR |
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 Piotroski F Score module to get Piotroski F Score based on the binary analysis strategy of nine different fundamentals.
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