Correlation Between Enel SpA and ENEL Societa
Can any of the company-specific risk be diversified away by investing in both Enel SpA and ENEL Societa 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 ENEL Societa into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Enel SpA and ENEL Societa per, you can compare the effects of market volatilities on Enel SpA and ENEL Societa 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 ENEL Societa. Check out your portfolio center. Please also check ongoing floating volatility patterns of Enel SpA and ENEL Societa.
Diversification Opportunities for Enel SpA and ENEL Societa
0.98 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between Enel and ENEL is 0.98. Overlapping area represents the amount of risk that can be diversified away by holding Enel SpA and ENEL Societa per in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ENEL Societa per 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 ENEL Societa. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of ENEL Societa per has no effect on the direction of Enel SpA i.e., Enel SpA and ENEL Societa go up and down completely randomly.
Pair Corralation between Enel SpA and ENEL Societa
Assuming the 90 days horizon Enel SpA is expected to generate 1.02 times less return on investment than ENEL Societa. In addition to that, Enel SpA is 1.36 times more volatile than ENEL Societa per. It trades about 0.23 of its total potential returns per unit of risk. ENEL Societa per is currently generating about 0.31 per unit of volatility. If you would invest 707.00 in ENEL Societa per on October 21, 2024 and sell it today you would earn a total of 34.00 from holding ENEL Societa per or generate 4.81% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Enel SpA vs. ENEL Societa per
Performance |
| Timeline |
| Enel SpA |
| ENEL Societa per |
Enel SpA and ENEL Societa Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Enel SpA and ENEL Societa
The main advantage of trading using opposite Enel SpA and ENEL Societa positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Enel SpA position performs unexpectedly, ENEL Societa 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 Societa will offset losses from the drop in ENEL Societa's long position.| Enel SpA vs. Iberdrola SA | Enel SpA vs. Iberdrola SA | Enel SpA vs. ENEL Societa per | Enel SpA vs. Sempra Energy |
| ENEL Societa vs. Oatly Group AB | ENEL Societa vs. Zane Interactive Publishing | ENEL Societa vs. Constellation Brands Class | ENEL Societa vs. Universal Technical Institute |
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 Headlines Timeline module to stay connected to all market stories and filter out noise. Drill down to analyze hype elasticity.
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