Correlation Between Naturgy Energy and ENN Energy
Can any of the company-specific risk be diversified away by investing in both Naturgy Energy and ENN Energy 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 Naturgy Energy and ENN Energy into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Naturgy Energy Group and ENN Energy Holdings, you can compare the effects of market volatilities on Naturgy Energy and ENN Energy 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 Naturgy Energy with a short position of ENN Energy. Check out your portfolio center. Please also check ongoing floating volatility patterns of Naturgy Energy and ENN Energy.
Diversification Opportunities for Naturgy Energy and ENN Energy
0.24 | Correlation Coefficient |
Modest diversification
The 3 months correlation between Naturgy and ENN is 0.24. Overlapping area represents the amount of risk that can be diversified away by holding Naturgy Energy Group and ENN Energy Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ENN Energy Holdings and Naturgy Energy 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 Naturgy Energy Group are associated (or correlated) with ENN Energy. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of ENN Energy Holdings has no effect on the direction of Naturgy Energy i.e., Naturgy Energy and ENN Energy go up and down completely randomly.
Pair Corralation between Naturgy Energy and ENN Energy
Assuming the 90 days horizon Naturgy Energy Group is expected to under-perform the ENN Energy. But the stock apears to be less risky and, when comparing its historical volatility, Naturgy Energy Group is 2.6 times less risky than ENN Energy. The stock trades about -0.01 of its potential returns per unit of risk. The ENN Energy Holdings is currently generating about 0.07 of returns per unit of risk over similar time horizon. If you would invest 386.00 in ENN Energy Holdings on September 14, 2024 and sell it today you would earn a total of 304.00 from holding ENN Energy Holdings or generate 78.76% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Naturgy Energy Group vs. ENN Energy Holdings
Performance |
| Timeline |
| Naturgy Energy Group |
| ENN Energy Holdings |
Naturgy Energy and ENN Energy Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Naturgy Energy and ENN Energy
The main advantage of trading using opposite Naturgy Energy and ENN Energy positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Naturgy Energy position performs unexpectedly, ENN Energy 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 ENN Energy will offset losses from the drop in ENN Energy's long position.| Naturgy Energy vs. CenterPoint Energy | Naturgy Energy vs. Snam SpA | Naturgy Energy vs. ENN Energy Holdings | Naturgy Energy vs. ENN Energy Holdings |
| ENN Energy vs. COSTCO WHOLESALE CDR | ENN Energy vs. Insurance Australia Group | ENN Energy vs. Fast Retailing Co | ENN Energy vs. Direct Line Insurance |
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 Center module to all portfolio management and optimization tools to improve performance of your portfolios.
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