Correlation Between Terna Rete and ENDESA ADR
Can any of the company-specific risk be diversified away by investing in both Terna Rete and ENDESA ADR 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 Terna Rete and ENDESA ADR into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Terna Rete and ENDESA ADR 12, you can compare the effects of market volatilities on Terna Rete and ENDESA ADR 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 Terna Rete with a short position of ENDESA ADR. Check out your portfolio center. Please also check ongoing floating volatility patterns of Terna Rete and ENDESA ADR.
Diversification Opportunities for Terna Rete and ENDESA ADR
0.39 | Correlation Coefficient |
Weak diversification
The 3 months correlation between Terna and ENDESA is 0.39. Overlapping area represents the amount of risk that can be diversified away by holding Terna Rete and ENDESA ADR 12 in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ENDESA ADR 12 and Terna Rete 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 Terna Rete are associated (or correlated) with ENDESA ADR. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of ENDESA ADR 12 has no effect on the direction of Terna Rete i.e., Terna Rete and ENDESA ADR go up and down completely randomly.
Pair Corralation between Terna Rete and ENDESA ADR
Assuming the 90 days horizon Terna Rete is expected to generate 3.37 times less return on investment than ENDESA ADR. But when comparing it to its historical volatility, Terna Rete is 1.33 times less risky than ENDESA ADR. It trades about 0.1 of its potential returns per unit of risk. ENDESA ADR 12 is currently generating about 0.25 of returns per unit of risk over similar time horizon. If you would invest 925.00 in ENDESA ADR 12 on September 13, 2024 and sell it today you would earn a total of 60.00 from holding ENDESA ADR 12 or generate 6.49% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Terna Rete vs. ENDESA ADR 12
Performance |
| Timeline |
| Terna Rete |
| ENDESA ADR 12 |
Terna Rete and ENDESA ADR Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Terna Rete and ENDESA ADR
The main advantage of trading using opposite Terna Rete and ENDESA ADR positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Terna Rete position performs unexpectedly, ENDESA ADR 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 ENDESA ADR will offset losses from the drop in ENDESA ADR's long position.| Terna Rete vs. TITAN MACHINERY | Terna Rete vs. Singapore Reinsurance | Terna Rete vs. REVO INSURANCE SPA | Terna Rete vs. Dairy Farm International |
| ENDESA ADR vs. Duke Energy | ENDESA ADR vs. WEC Energy Group | ENDESA ADR vs. CMS Energy | ENDESA ADR vs. Terna Rete |
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 Economic Indicators module to top statistical indicators that provide insights into how an economy is performing.
Other Complementary Tools
| Watchlist Optimization Optimize watchlists to build efficient portfolios or rebalance existing positions based on the mean-variance optimization algorithm | |
| Latest Portfolios Quick portfolio dashboard that showcases your latest portfolios | |
| Portfolio Backtesting Avoid under-diversification and over-optimization by backtesting your portfolios | |
| Technical Analysis Check basic technical indicators and analysis based on most latest market data | |
| Sync Your Broker Sync your existing holdings, watchlists, positions or portfolios from thousands of online brokerage services, banks, investment account aggregators and robo-advisors. |