Correlation Between Enel Chile and Xcel Energy
Can any of the company-specific risk be diversified away by investing in both Enel Chile and Xcel 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 Xcel 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 Xcel Energy, you can compare the effects of market volatilities on Enel Chile and Xcel 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 Xcel Energy. Check out your portfolio center. Please also check ongoing floating volatility patterns of Enel Chile and Xcel Energy.
Diversification Opportunities for Enel Chile and Xcel Energy
-0.44 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Enel and Xcel is -0.44. Overlapping area represents the amount of risk that can be diversified away by holding Enel Chile SA and Xcel Energy in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Xcel 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 Xcel Energy. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Xcel Energy has no effect on the direction of Enel Chile i.e., Enel Chile and Xcel Energy go up and down completely randomly.
Pair Corralation between Enel Chile and Xcel Energy
Given the investment horizon of 90 days Enel Chile SA is expected to generate 1.32 times more return on investment than Xcel Energy. However, Enel Chile is 1.32 times more volatile than Xcel Energy. It trades about 0.05 of its potential returns per unit of risk. Xcel Energy is currently generating about 0.04 per unit of risk. If you would invest 264.00 in Enel Chile SA on November 9, 2024 and sell it today you would earn a total of 57.00 from holding Enel Chile SA or generate 21.59% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Enel Chile SA vs. Xcel Energy
Performance |
| Timeline |
| Enel Chile SA |
| Xcel Energy |
Enel Chile and Xcel Energy Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Enel Chile and Xcel Energy
The main advantage of trading using opposite Enel Chile and Xcel Energy positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Enel Chile position performs unexpectedly, Xcel 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 Xcel Energy will offset losses from the drop in Xcel 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 |
| Xcel Energy vs. Alliant Energy Corp | Xcel Energy vs. Entergy | Xcel Energy vs. Pinnacle West Capital | Xcel Energy 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 Money Managers module to screen money managers from public funds and ETFs managed around the world.
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