Correlation Between Endesa SA and General De
Can any of the company-specific risk be diversified away by investing in both Endesa SA and General De 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 Endesa SA and General De into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Endesa SA and General de Alquiler, you can compare the effects of market volatilities on Endesa SA and General De 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 Endesa SA with a short position of General De. Check out your portfolio center. Please also check ongoing floating volatility patterns of Endesa SA and General De.
Diversification Opportunities for Endesa SA and General De
0.0 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between Endesa and General is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding Endesa SA and General de Alquiler in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on General de Alquiler and Endesa SA 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 Endesa SA are associated (or correlated) with General De. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of General de Alquiler has no effect on the direction of Endesa SA i.e., Endesa SA and General De go up and down completely randomly.
Pair Corralation between Endesa SA and General De
Assuming the 90 days trading horizon Endesa SA is expected to generate 2.0 times less return on investment than General De. But when comparing it to its historical volatility, Endesa SA is 1.74 times less risky than General De. It trades about 0.1 of its potential returns per unit of risk. General de Alquiler is currently generating about 0.12 of returns per unit of risk over similar time horizon. If you would invest 125.00 in General de Alquiler on January 24, 2024 and sell it today you would earn a total of 6.00 from holding General de Alquiler or generate 4.8% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Flat |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Endesa SA vs. General de Alquiler
Performance |
| Timeline |
| Endesa SA |
| General de Alquiler |
Endesa SA and General De Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Endesa SA and General De
The main advantage of trading using opposite Endesa SA and General De positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Endesa SA position performs unexpectedly, General De 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 General De will offset losses from the drop in General De's long position.The idea behind Endesa SA and General de Alquiler pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.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 Commodity Channel module to use Commodity Channel Index to analyze current equity momentum.
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