Correlation Between Energia Latina and Engie Energia
Can any of the company-specific risk be diversified away by investing in both Energia Latina and Engie Energia 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 Energia Latina and Engie Energia into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Energia Latina SA and Engie Energia Chile, you can compare the effects of market volatilities on Energia Latina and Engie Energia 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 Energia Latina with a short position of Engie Energia. Check out your portfolio center. Please also check ongoing floating volatility patterns of Energia Latina and Engie Energia.
Diversification Opportunities for Energia Latina and Engie Energia
0.63 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Energia and Engie is 0.63. Overlapping area represents the amount of risk that can be diversified away by holding Energia Latina SA and Engie Energia Chile in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Engie Energia Chile and Energia Latina 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 Energia Latina SA are associated (or correlated) with Engie Energia. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Engie Energia Chile has no effect on the direction of Energia Latina i.e., Energia Latina and Engie Energia go up and down completely randomly.
Pair Corralation between Energia Latina and Engie Energia
Assuming the 90 days trading horizon Energia Latina is expected to generate 1.19 times less return on investment than Engie Energia. In addition to that, Energia Latina is 1.99 times more volatile than Engie Energia Chile. It trades about 0.04 of its total potential returns per unit of risk. Engie Energia Chile is currently generating about 0.09 per unit of volatility. If you would invest 49,000 in Engie Energia Chile on September 20, 2024 and sell it today you would earn a total of 38,710 from holding Engie Energia Chile or generate 79.0% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 61.55% |
| Values | Daily Returns |
Energia Latina SA vs. Engie Energia Chile
Performance |
| Timeline |
| Energia Latina SA |
| Engie Energia Chile |
Energia Latina and Engie Energia Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Energia Latina and Engie Energia
The main advantage of trading using opposite Energia Latina and Engie Energia positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Energia Latina position performs unexpectedly, Engie Energia 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 Engie Energia will offset losses from the drop in Engie Energia's long position.| Energia Latina vs. CAP SA | Energia Latina vs. Salfacorp | Energia Latina vs. Vina Concha To | Energia Latina vs. Sociedad Matriz SAAM |
| Engie Energia vs. Colbun | Engie Energia vs. Enel Chile SA | Engie Energia vs. CAP SA | Engie Energia vs. Enel Amricas SA |
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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