Correlation Between ENN Energy and Naturgy Energy
Can any of the company-specific risk be diversified away by investing in both ENN Energy and Naturgy 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 ENN Energy and Naturgy Energy into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between ENN Energy Holdings and Naturgy Energy Group, you can compare the effects of market volatilities on ENN Energy and Naturgy 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 ENN Energy with a short position of Naturgy Energy. Check out your portfolio center. Please also check ongoing floating volatility patterns of ENN Energy and Naturgy Energy.
Diversification Opportunities for ENN Energy and Naturgy Energy
0.2 | Correlation Coefficient |
Modest diversification
The 3 months correlation between ENN and Naturgy is 0.2. Overlapping area represents the amount of risk that can be diversified away by holding ENN Energy Holdings and Naturgy Energy Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Naturgy Energy Group and ENN 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 ENN Energy Holdings are associated (or correlated) with Naturgy Energy. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Naturgy Energy Group has no effect on the direction of ENN Energy i.e., ENN Energy and Naturgy Energy go up and down completely randomly.
Pair Corralation between ENN Energy and Naturgy Energy
Assuming the 90 days horizon ENN Energy Holdings is expected to generate 1.95 times more return on investment than Naturgy Energy. However, ENN Energy is 1.95 times more volatile than Naturgy Energy Group. It trades about 0.14 of its potential returns per unit of risk. Naturgy Energy Group is currently generating about 0.06 per unit of risk. If you would invest 561.00 in ENN Energy Holdings on September 13, 2024 and sell it today you would earn a total of 129.00 from holding ENN Energy Holdings or generate 22.99% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 97.73% |
| Values | Daily Returns |
ENN Energy Holdings vs. Naturgy Energy Group
Performance |
| Timeline |
| ENN Energy Holdings |
| Naturgy Energy Group |
ENN Energy and Naturgy Energy Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with ENN Energy and Naturgy Energy
The main advantage of trading using opposite ENN Energy and Naturgy Energy positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if ENN Energy position performs unexpectedly, Naturgy 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 Naturgy Energy will offset losses from the drop in Naturgy Energy's long position.| ENN Energy vs. Naturgy Energy Group | ENN Energy vs. CenterPoint Energy | ENN Energy vs. Snam SpA | ENN Energy vs. ENN Energy Holdings |
| Naturgy Energy vs. CenterPoint Energy | Naturgy Energy vs. Snam SpA | Naturgy Energy vs. ENN Energy Holdings | Naturgy Energy vs. ENN Energy Holdings |
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 Backtesting module to avoid under-diversification and over-optimization by backtesting your portfolios.
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