Correlation Between FirstEnergy and Enel Chile
Can any of the company-specific risk be diversified away by investing in both FirstEnergy and Enel Chile 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 FirstEnergy and Enel Chile into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between FirstEnergy and Enel Chile SA, you can compare the effects of market volatilities on FirstEnergy and Enel Chile 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 FirstEnergy with a short position of Enel Chile. Check out your portfolio center. Please also check ongoing floating volatility patterns of FirstEnergy and Enel Chile.
Diversification Opportunities for FirstEnergy and Enel Chile
-0.24 | Correlation Coefficient |
Very good diversification
The 3 months correlation between FirstEnergy and Enel is -0.24. Overlapping area represents the amount of risk that can be diversified away by holding FirstEnergy and Enel Chile SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Enel Chile SA and FirstEnergy 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 FirstEnergy are associated (or correlated) with Enel Chile. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Enel Chile SA has no effect on the direction of FirstEnergy i.e., FirstEnergy and Enel Chile go up and down completely randomly.
Pair Corralation between FirstEnergy and Enel Chile
Allowing for the 90-day total investment horizon FirstEnergy is expected to generate 0.54 times more return on investment than Enel Chile. However, FirstEnergy is 1.85 times less risky than Enel Chile. It trades about -0.18 of its potential returns per unit of risk. Enel Chile SA is currently generating about -0.11 per unit of risk. If you would invest 4,323 in FirstEnergy on August 27, 2024 and sell it today you would lose (144.00) from holding FirstEnergy or give up 3.33% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
FirstEnergy vs. Enel Chile SA
Performance |
| Timeline |
| FirstEnergy |
| Enel Chile SA |
FirstEnergy and Enel Chile Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with FirstEnergy and Enel Chile
The main advantage of trading using opposite FirstEnergy and Enel Chile positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if FirstEnergy position performs unexpectedly, Enel Chile 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 Chile will offset losses from the drop in Enel Chile's long position.| FirstEnergy vs. CenterPoint Energy | FirstEnergy vs. Pinnacle West Capital | FirstEnergy vs. Edison International | FirstEnergy vs. Public Service Enterprise |
| Enel Chile vs. Dominion Energy | Enel Chile vs. Consolidated Edison | Enel Chile vs. Eversource Energy | Enel Chile vs. FirstEnergy |
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 Cryptocurrency Center module to build and monitor diversified portfolio of extremely risky digital assets and cryptocurrency.
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