Correlation Between Endesa SA and Eversource Energy
Can any of the company-specific risk be diversified away by investing in both Endesa SA and Eversource 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 Endesa SA and Eversource Energy into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Endesa SA and Eversource Energy, you can compare the effects of market volatilities on Endesa SA and Eversource 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 Endesa SA with a short position of Eversource Energy. Check out your portfolio center. Please also check ongoing floating volatility patterns of Endesa SA and Eversource Energy.
Diversification Opportunities for Endesa SA and Eversource Energy
-0.89 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between Endesa and Eversource is -0.89. Overlapping area represents the amount of risk that can be diversified away by holding Endesa SA and Eversource Energy in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Eversource Energy 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 Eversource Energy. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Eversource Energy has no effect on the direction of Endesa SA i.e., Endesa SA and Eversource Energy go up and down completely randomly.
Pair Corralation between Endesa SA and Eversource Energy
Assuming the 90 days horizon Endesa SA is expected to under-perform the Eversource Energy. But the pink sheet apears to be less risky and, when comparing its historical volatility, Endesa SA is 1.54 times less risky than Eversource Energy. The pink sheet trades about -0.05 of its potential returns per unit of risk. The Eversource Energy is currently generating about 0.15 of returns per unit of risk over similar time horizon. If you would invest 5,752 in Eversource Energy on January 24, 2024 and sell it today you would earn a total of 278.00 from holding Eversource Energy or generate 4.83% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Endesa SA vs. Eversource Energy
Performance |
| Timeline |
| Endesa SA |
| Eversource Energy |
Endesa SA and Eversource Energy Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Endesa SA and Eversource Energy
The main advantage of trading using opposite Endesa SA and Eversource Energy positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Endesa SA position performs unexpectedly, Eversource 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 Eversource Energy will offset losses from the drop in Eversource Energy's long position.| Endesa SA vs. Duke Energy | Endesa SA vs. Southern Company | Endesa SA vs. American Electric Power | Endesa SA vs. Nextera Energy |
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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 Financial Widgets module to easily integrated Macroaxis content with over 30 different plug-and-play financial widgets.
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