Correlation Between OGE Energy and Enel Chile
Can any of the company-specific risk be diversified away by investing in both OGE Energy 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 OGE Energy and Enel Chile into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between OGE Energy and Enel Chile SA, you can compare the effects of market volatilities on OGE Energy 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 OGE Energy with a short position of Enel Chile. Check out your portfolio center. Please also check ongoing floating volatility patterns of OGE Energy and Enel Chile.
Diversification Opportunities for OGE Energy and Enel Chile
0.8 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between OGE and Enel is 0.8. Overlapping area represents the amount of risk that can be diversified away by holding OGE Energy 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 OGE 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 OGE Energy 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 OGE Energy i.e., OGE Energy and Enel Chile go up and down completely randomly.
Pair Corralation between OGE Energy and Enel Chile
Considering the 90-day investment horizon OGE Energy is expected to generate 0.49 times more return on investment than Enel Chile. However, OGE Energy is 2.05 times less risky than Enel Chile. It trades about -0.02 of its potential returns per unit of risk. Enel Chile SA is currently generating about -0.04 per unit of risk. If you would invest 4,383 in OGE Energy on January 9, 2025 and sell it today you would lose (40.00) from holding OGE Energy or give up 0.91% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
OGE Energy vs. Enel Chile SA
Performance |
| Timeline |
| OGE Energy |
| Enel Chile SA |
OGE Energy and Enel Chile Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with OGE Energy and Enel Chile
The main advantage of trading using opposite OGE Energy and Enel Chile positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if OGE Energy 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.| OGE Energy vs. Alliant Energy Corp | OGE Energy vs. CMS Energy | OGE Energy vs. CenterPoint Energy | OGE Energy vs. Pinnacle West Capital |
| Enel Chile vs. Centrais Eltricas Brasileiras | Enel Chile vs. Korea Electric Power | Enel Chile vs. Central Puerto SA | Enel Chile vs. CMS Energy |
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 Watchlist Optimization module to optimize watchlists to build efficient portfolios or rebalance existing positions based on the mean-variance optimization algorithm.
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