Correlation Between Enel Amricas and Enel Chile

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

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

Diversification Opportunities for Enel Amricas and Enel Chile

-0.43

Correlation Coefficient

Enel Amricas  Enel Chile

Very good diversification

The 3 months correlation between Enel and Enel is -0.43. Overlapping area represents the amount of risk that can be diversified away by holding Enel Amricas SA and Enel Chile SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Enel Chile SA and Enel Amricas 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 Amricas SA are associated (or correlated) with Enel Chile. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Enel Chile SA has no effect on the direction of Enel Amricas i.e., Enel Amricas and Enel Chile go up and down completely randomly.

Pair Corralation between Enel Amricas and Enel Chile

Assuming the 90 days trading horizon Enel Amricas SA is expected to under-perform the Enel Chile. But the stock apears to be less risky and, when comparing its historical volatility, Enel Amricas SA is 1.42 times less risky than Enel Chile. The stock trades about -0.1 of its potential returns per unit of risk. The Enel Chile SA is currently generating about 0.09 of returns per unit of risk over similar time horizon. If you would invest  4,951  in Enel Chile SA on September 3, 2024 and sell it today you would earn a total of  409.00  from holding Enel Chile SA or generate 8.26% return on investment over 90 days.

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

Enel Amricas SA  vs.  Enel Chile SA

Enel Amricas SA

Risk-Adjusted Performance

0 of 100

Very Weak

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

Enel Chile SA

Risk-Adjusted Performance

7 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Enel Chile SA are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. Despite fairly weak technical indicators, Enel Chile may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Pair Trading with Enel Amricas and Enel Chile

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

The idea behind Enel Amricas SA and Enel Chile SA 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 USA ETFs module to find actively traded Exchange Traded Funds (ETF) in USA.