Correlation Between Enel SpA and AES
Can any of the company-specific risk be diversified away by investing in both Enel SpA and AES 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 Enel SpA and AES into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Enel SpA and The AES, you can compare the effects of market volatilities on Enel SpA and AES 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 Enel SpA with a short position of AES. Check out your portfolio center. Please also check ongoing floating volatility patterns of Enel SpA and AES.
Diversification Opportunities for Enel SpA and AES
Very weak diversification
The 3 months correlation between Enel and AES is 0.5. Overlapping area represents the amount of risk that can be diversified away by holding Enel SpA and The AES in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on AES and Enel SpA 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 Enel SpA are associated (or correlated) with AES. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of AES has no effect on the direction of Enel SpA i.e., Enel SpA and AES go up and down completely randomly.
Pair Corralation between Enel SpA and AES
Assuming the 90 days horizon Enel SpA is expected to generate 1.17 times less return on investment than AES. But when comparing it to its historical volatility, Enel SpA is 2.13 times less risky than AES. It trades about 0.65 of its potential returns per unit of risk. The AES is currently generating about 0.36 of returns per unit of risk over similar time horizon. If you would invest 1,562 in The AES on February 15, 2024 and sell it today you would earn a total of 283.00 from holding The AES or generate 18.12% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Together |
Strength | Weak |
Accuracy | 100.0% |
Values | Daily Returns |
Enel SpA vs. The AES
Performance |
Timeline |
Enel SpA |
AES |
Enel SpA and AES Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Enel SpA and AES
The main advantage of trading using opposite Enel SpA and AES positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Enel SpA position performs unexpectedly, AES 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 AES will offset losses from the drop in AES's long position.Enel SpA vs. NMI Holdings | Enel SpA vs. Origin Agritech | Enel SpA vs. SIVERS SEMICONDUCTORS AB | Enel SpA vs. 2G 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 Equity Valuation module to check real value of public entities based on technical and fundamental data.
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