Correlation Between Enel Chile and Ameriprise Financial

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

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

Diversification Opportunities for Enel Chile and Ameriprise Financial

0.4

Correlation Coefficient

Enel Chile  Ameriprise Financial

Very weak diversification

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

Pair Corralation between Enel Chile and Ameriprise Financial

Given the investment horizon of 90 days Enel Chile is expected to generate 3.19 times less return on investment than Ameriprise Financial. In addition to that, Enel Chile is 1.0 times more volatile than Ameriprise Financial. It trades about 0.06 of its total potential returns per unit of risk. Ameriprise Financial is currently generating about 0.2 per unit of volatility. If you would invest  44,384  in Ameriprise Financial on September 16, 2024 and sell it today you would earn a total of  10,592  from holding Ameriprise Financial or generate 23.86% return on investment over 90 days.

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

Enel Chile SA  vs.  Ameriprise Financial

Enel Chile SA

Risk-Adjusted Performance

5 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Enel Chile SA are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. In spite of rather weak forward indicators, Enel Chile may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Ameriprise Financial

Risk-Adjusted Performance

16 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Ameriprise Financial are ranked lower than 16 (%) of all global equities and portfolios over the last 90 days. Even with relatively uncertain primary indicators, Ameriprise Financial reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Enel Chile and Ameriprise Financial

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

The idea behind Enel Chile SA and Ameriprise Financial 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 Bonds Directory module to find actively traded corporate debentures issued by US companies.