Correlation Between Enel SpA and Black Hills
Can any of the company-specific risk be diversified away by investing in both Enel SpA and Black Hills 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 SpA and Black Hills into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Enel SpA and Black Hills, you can compare the effects of market volatilities on Enel SpA and Black Hills 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 SpA with a short position of Black Hills. Check out your portfolio center. Please also check ongoing floating volatility patterns of Enel SpA and Black Hills.
Diversification Opportunities for Enel SpA and Black Hills
-0.22 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Enel and Black is -0.22. Overlapping area represents the amount of risk that can be diversified away by holding Enel SpA and Black Hills in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Black Hills and Enel SpA 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 SpA are associated (or correlated) with Black Hills. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Black Hills has no effect on the direction of Enel SpA i.e., Enel SpA and Black Hills go up and down completely randomly.
Pair Corralation between Enel SpA and Black Hills
Assuming the 90 days horizon Enel SpA is expected to generate 1.29 times more return on investment than Black Hills. However, Enel SpA is 1.29 times more volatile than Black Hills. It trades about 0.04 of its potential returns per unit of risk. Black Hills is currently generating about 0.05 per unit of risk. If you would invest 674.00 in Enel SpA on November 3, 2024 and sell it today you would earn a total of 41.00 from holding Enel SpA or generate 6.08% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 99.2% |
| Values | Daily Returns |
Enel SpA vs. Black Hills
Performance |
| Timeline |
| Enel SpA |
| Black Hills |
Enel SpA and Black Hills Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Enel SpA and Black Hills
The main advantage of trading using opposite Enel SpA and Black Hills positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Enel SpA position performs unexpectedly, Black Hills 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 Black Hills will offset losses from the drop in Black Hills' long position.The idea behind Enel SpA and Black Hills pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.| Black Hills vs. NorthWestern | Black Hills vs. Avista | Black Hills vs. Otter Tail | Black Hills vs. Companhia Paranaense de |
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 Piotroski F Score module to get Piotroski F Score based on the binary analysis strategy of nine different fundamentals.
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