Correlation Between EON SE and Enel SpA
Can any of the company-specific risk be diversified away by investing in both EON SE and Enel SpA 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 EON SE and Enel SpA into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between EON SE and Enel SpA, you can compare the effects of market volatilities on EON SE and Enel SpA 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 EON SE with a short position of Enel SpA. Check out your portfolio center. Please also check ongoing floating volatility patterns of EON SE and Enel SpA.
Diversification Opportunities for EON SE and Enel SpA
Poor diversification
The 3 months correlation between EON and Enel is 0.76. Overlapping area represents the amount of risk that can be diversified away by holding EON SE and Enel SpA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Enel SpA and EON SE 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 EON SE are associated (or correlated) with Enel SpA. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Enel SpA has no effect on the direction of EON SE i.e., EON SE and Enel SpA go up and down completely randomly.
Pair Corralation between EON SE and Enel SpA
Assuming the 90 days trading horizon EON SE is expected to under-perform the Enel SpA. In addition to that, EON SE is 1.29 times more volatile than Enel SpA. It trades about -0.09 of its total potential returns per unit of risk. Enel SpA is currently generating about -0.11 per unit of volatility. If you would invest 703.00 in Enel SpA on September 3, 2024 and sell it today you would lose (22.00) from holding Enel SpA or give up 3.13% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
EON SE vs. Enel SpA
Performance |
| Timeline |
| EON SE |
| Enel SpA |
EON SE and Enel SpA Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with EON SE and Enel SpA
The main advantage of trading using opposite EON SE and Enel SpA positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if EON SE position performs unexpectedly, Enel SpA 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 Enel SpA will offset losses from the drop in Enel SpA's long position.| EON SE vs. KENEDIX OFFICE INV | EON SE vs. WillScot Mobile Mini | EON SE vs. QUEEN S ROAD | EON SE vs. Broadwind |
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 Backtesting module to avoid under-diversification and over-optimization by backtesting your portfolios.
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