Correlation Between Ferrovial and ENCE Energa
Can any of the company-specific risk be diversified away by investing in both Ferrovial and ENCE Energa 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 Ferrovial and ENCE Energa into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Ferrovial and ENCE Energa y, you can compare the effects of market volatilities on Ferrovial and ENCE Energa 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 Ferrovial with a short position of ENCE Energa. Check out your portfolio center. Please also check ongoing floating volatility patterns of Ferrovial and ENCE Energa.
Diversification Opportunities for Ferrovial and ENCE Energa
0.12 | Correlation Coefficient |
Average diversification
The 3 months correlation between Ferrovial and ENCE is 0.12. Overlapping area represents the amount of risk that can be diversified away by holding Ferrovial and ENCE Energa y in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ENCE Energa y and Ferrovial 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 Ferrovial are associated (or correlated) with ENCE Energa. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of ENCE Energa y has no effect on the direction of Ferrovial i.e., Ferrovial and ENCE Energa go up and down completely randomly.
Pair Corralation between Ferrovial and ENCE Energa
Assuming the 90 days trading horizon Ferrovial is expected to generate 15.98 times less return on investment than ENCE Energa. But when comparing it to its historical volatility, Ferrovial is 1.35 times less risky than ENCE Energa. It trades about 0.01 of its potential returns per unit of risk. ENCE Energa y is currently generating about 0.07 of returns per unit of risk over similar time horizon. If you would invest 280.00 in ENCE Energa y on August 25, 2024 and sell it today you would earn a total of 6.00 from holding ENCE Energa y or generate 2.14% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Ferrovial vs. ENCE Energa y
Performance |
| Timeline |
| Ferrovial |
| ENCE Energa y |
Ferrovial and ENCE Energa Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Ferrovial and ENCE Energa
The main advantage of trading using opposite Ferrovial and ENCE Energa positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Ferrovial position performs unexpectedly, ENCE Energa 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 ENCE Energa will offset losses from the drop in ENCE Energa's long position.The idea behind Ferrovial and ENCE Energa y 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.| ENCE Energa vs. ACS Actividades de | ENCE Energa vs. ArcelorMittal SA | ENCE Energa vs. Mapfre | ENCE Energa vs. Ferrovial |
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 Financial Widgets module to easily integrated Macroaxis content with over 30 different plug-and-play financial widgets.
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