Correlation Between Enel Generacion and Halliburton

Can any of the company-specific risk be diversified away by investing in both Enel Generacion and Halliburton 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 Generacion and Halliburton into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Enel Generacion Costanera and Halliburton Co, you can compare the effects of market volatilities on Enel Generacion and Halliburton 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 Generacion with a short position of Halliburton. Check out your portfolio center. Please also check ongoing floating volatility patterns of Enel Generacion and Halliburton.

Diversification Opportunities for Enel Generacion and Halliburton

-0.4

Correlation Coefficient

Enel Generacion  Halliburton

Very good diversification

The 3 months correlation between Enel and Halliburton is -0.4. Overlapping area represents the amount of risk that can be diversified away by holding Enel Generacion Costanera and Halliburton Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Halliburton and Enel Generacion 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 Generacion Costanera are associated (or correlated) with Halliburton. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Halliburton has no effect on the direction of Enel Generacion i.e., Enel Generacion and Halliburton go up and down completely randomly.

Pair Corralation between Enel Generacion and Halliburton

Assuming the 90 days trading horizon Enel Generacion Costanera is expected to generate 1.03 times more return on investment than Halliburton. However, Enel Generacion is 1.03 times more volatile than Halliburton Co. It trades about 0.23 of its potential returns per unit of risk. Halliburton Co is currently generating about -0.07 per unit of risk. If you would invest  33,950  in Enel Generacion Costanera on September 15, 2024 and sell it today you would earn a total of  13,750  from holding Enel Generacion Costanera or generate 40.5% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	100.0%
Values	Daily Returns

Enel Generacion Costanera  vs.  Halliburton Co

Enel Generacion Costanera

Risk-Adjusted Performance

17 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Enel Generacion Costanera are ranked lower than 17 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak fundamental drivers, Enel Generacion sustained solid returns over the last few months and may actually be approaching a breakup point.

Halliburton

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Halliburton Co has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest weak performance, the Stock's essential indicators remain strong and the current disturbance on Wall Street may also be a sign of long term gains for the company investors.

Pair Trading with Enel Generacion and Halliburton

The main advantage of trading using opposite Enel Generacion and Halliburton positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Enel Generacion position performs unexpectedly, Halliburton 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 Halliburton will offset losses from the drop in Halliburton's long position.

The idea behind Enel Generacion Costanera and Halliburton Co 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.

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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 Directory module to find actively traded commodities issued by global exchanges.