Correlation Between Elecnor SA and Berkeley Energia
Can any of the company-specific risk be diversified away by investing in both Elecnor SA and Berkeley 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 Elecnor SA and Berkeley Energia into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Elecnor SA and Berkeley Energia Limited, you can compare the effects of market volatilities on Elecnor SA and Berkeley 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 Elecnor SA with a short position of Berkeley Energia. Check out your portfolio center. Please also check ongoing floating volatility patterns of Elecnor SA and Berkeley Energia.
Diversification Opportunities for Elecnor SA and Berkeley Energia
0.46 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Elecnor and Berkeley is 0.46. Overlapping area represents the amount of risk that can be diversified away by holding Elecnor SA and Berkeley Energia Limited in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Berkeley Energia and Elecnor SA 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 Elecnor SA are associated (or correlated) with Berkeley Energia. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Berkeley Energia has no effect on the direction of Elecnor SA i.e., Elecnor SA and Berkeley Energia go up and down completely randomly.
Pair Corralation between Elecnor SA and Berkeley Energia
Assuming the 90 days trading horizon Elecnor SA is expected to generate 0.53 times more return on investment than Berkeley Energia. However, Elecnor SA is 1.9 times less risky than Berkeley Energia. It trades about 0.08 of its potential returns per unit of risk. Berkeley Energia Limited is currently generating about -0.06 per unit of risk. If you would invest 1,966 in Elecnor SA on August 31, 2024 and sell it today you would earn a total of 49.00 from holding Elecnor SA or generate 2.49% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Elecnor SA vs. Berkeley Energia Limited
Performance |
| Timeline |
| Elecnor SA |
| Berkeley Energia |
Elecnor SA and Berkeley Energia Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Elecnor SA and Berkeley Energia
The main advantage of trading using opposite Elecnor SA and Berkeley Energia positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Elecnor SA position performs unexpectedly, Berkeley 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 Berkeley Energia will offset losses from the drop in Berkeley Energia's long position.| Elecnor SA vs. Miquel y Costas | Elecnor SA vs. Construcciones y Auxiliar | Elecnor SA vs. Grupo Catalana Occidente | Elecnor SA vs. Tecnicas Reunidas |
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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 Portfolio Comparator module to compare the composition, asset allocations and performance of any two portfolios in your account.
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