Correlation Between ENEL Societa and Electricite

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

By analyzing existing cross correlation between ENEL Societa per and Electricite De France, you can compare the effects of market volatilities on ENEL Societa and Electricite 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 Societa with a short position of Electricite. Check out your portfolio center. Please also check ongoing floating volatility patterns of ENEL Societa and Electricite.

Diversification Opportunities for ENEL Societa and Electricite

-0.08

Correlation Coefficient

ENEL Societa  Electricite

Good diversification

The 3 months correlation between ENEL and Electricite is -0.08. Overlapping area represents the amount of risk that can be diversified away by holding ENEL Societa per and Electricite De France in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Electricite De France and ENEL Societa 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 Societa per are associated (or correlated) with Electricite. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Electricite De France has no effect on the direction of ENEL Societa i.e., ENEL Societa and Electricite go up and down completely randomly.

Pair Corralation between ENEL Societa and Electricite

If you would invest  255.00  in Electricite De France on September 5, 2024 and sell it today you would earn a total of  0.00  from holding Electricite De France or generate 0.0% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	1.59%
Values	Daily Returns

ENEL Societa per  vs.  Electricite De France

ENEL Societa per

Risk-Adjusted Performance

0 of 100

Very Weak

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

Electricite De France

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Electricite De France has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly strong technical and fundamental indicators, Electricite is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with ENEL Societa and Electricite

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

The idea behind ENEL Societa per and Electricite De France 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 Positions Ratings module to determine portfolio positions ratings based on digital equity recommendations. Macroaxis instant position ratings are based on combination of fundamental analysis and risk-adjusted market performance.