Correlation Between Empresa Nacional and IAUCL
Can any of the company-specific risk be diversified away by investing in both Empresa Nacional and IAUCL 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 Empresa Nacional and IAUCL into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Empresa Nacional de and IAUCL, you can compare the effects of market volatilities on Empresa Nacional and IAUCL 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 Empresa Nacional with a short position of IAUCL. Check out your portfolio center. Please also check ongoing floating volatility patterns of Empresa Nacional and IAUCL.
Diversification Opportunities for Empresa Nacional and IAUCL
-0.04 | Correlation Coefficient |
Good diversification
The 3 months correlation between Empresa and IAUCL is -0.04. Overlapping area represents the amount of risk that can be diversified away by holding Empresa Nacional de and IAUCL in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on IAUCL and Empresa Nacional 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 Empresa Nacional de are associated (or correlated) with IAUCL. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of IAUCL has no effect on the direction of Empresa Nacional i.e., Empresa Nacional and IAUCL go up and down completely randomly.
Pair Corralation between Empresa Nacional and IAUCL
Assuming the 90 days trading horizon Empresa Nacional de is expected to under-perform the IAUCL. But the stock apears to be less risky and, when comparing its historical volatility, Empresa Nacional de is 1.63 times less risky than IAUCL. The stock trades about -0.19 of its potential returns per unit of risk. The IAUCL is currently generating about 0.05 of returns per unit of risk over similar time horizon. If you would invest 4,858 in IAUCL on September 20, 2024 and sell it today you would earn a total of 131.00 from holding IAUCL or generate 2.7% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Empresa Nacional de vs. IAUCL
Performance |
| Timeline |
| Empresa Nacional |
| IAUCL |
Empresa Nacional and IAUCL Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Empresa Nacional and IAUCL
The main advantage of trading using opposite Empresa Nacional and IAUCL positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Empresa Nacional position performs unexpectedly, IAUCL 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 IAUCL will offset losses from the drop in IAUCL's long position.| Empresa Nacional vs. Cencosud | Empresa Nacional vs. Empresas Copec SA | Empresa Nacional vs. Falabella | Empresa Nacional vs. Empresas CMPC |
| IAUCL vs. Aguas Andinas SA | IAUCL vs. Parq Arauco | IAUCL vs. Enel Generacin Chile | IAUCL vs. Sociedad Matriz SAAM |
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 Premium Stories module to follow Macroaxis premium stories from verified contributors across different equity types, categories and coverage scope.
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