Correlation Between Southern and Enel Chile
Can any of the company-specific risk be diversified away by investing in both Southern 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 Southern and Enel Chile into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Southern Company and Enel Chile SA, you can compare the effects of market volatilities on Southern 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 Southern with a short position of Enel Chile. Check out your portfolio center. Please also check ongoing floating volatility patterns of Southern and Enel Chile.
Diversification Opportunities for Southern and Enel Chile
0.21 | Correlation Coefficient |
Modest diversification
The 3 months correlation between Southern and Enel is 0.21. Overlapping area represents the amount of risk that can be diversified away by holding Southern Company 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 Southern 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 Southern Company 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 Southern i.e., Southern and Enel Chile go up and down completely randomly.
Pair Corralation between Southern and Enel Chile
Allowing for the 90-day total investment horizon Southern is expected to generate 1.92 times less return on investment than Enel Chile. But when comparing it to its historical volatility, Southern Company is 1.73 times less risky than Enel Chile. It trades about 0.06 of its potential returns per unit of risk. Enel Chile SA is currently generating about 0.06 of returns per unit of risk over similar time horizon. If you would invest 210.00 in Enel Chile SA on November 28, 2024 and sell it today you would earn a total of 137.00 from holding Enel Chile SA or generate 65.24% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Southern Company vs. Enel Chile SA
Performance |
| Timeline |
| Southern |
| Enel Chile SA |
Southern and Enel Chile Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Southern and Enel Chile
The main advantage of trading using opposite Southern and Enel Chile positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Southern 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.| Southern vs. Dominion Energy | Southern vs. American Electric Power | Southern vs. Nextera Energy | Southern vs. Consolidated Edison |
| 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 FinTech Suite module to use AI to screen and filter profitable investment opportunities.
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