Correlation Between Enel Generacion and Apple

Can any of the company-specific risk be diversified away by investing in both Enel Generacion and Apple 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 Apple 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 Apple Inc DRC, you can compare the effects of market volatilities on Enel Generacion and Apple 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 Apple. Check out your portfolio center. Please also check ongoing floating volatility patterns of Enel Generacion and Apple.

Diversification Opportunities for Enel Generacion and Apple

-0.58

Correlation Coefficient

Enel Generacion  Apple

Excellent diversification

The 3 months correlation between Enel and Apple is -0.58. Overlapping area represents the amount of risk that can be diversified away by holding Enel Generacion Costanera and Apple Inc DRC in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Apple Inc DRC 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 Apple. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Apple Inc DRC has no effect on the direction of Enel Generacion i.e., Enel Generacion and Apple go up and down completely randomly.

Pair Corralation between Enel Generacion and Apple

Assuming the 90 days trading horizon Enel Generacion Costanera is expected to generate 1.76 times more return on investment than Apple. However, Enel Generacion is 1.76 times more volatile than Apple Inc DRC. It trades about 0.06 of its potential returns per unit of risk. Apple Inc DRC is currently generating about -0.03 per unit of risk. If you would invest  47,250  in Enel Generacion Costanera on December 27, 2024 and sell it today you would earn a total of  4,250  from holding Enel Generacion Costanera or generate 8.99% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	98.33%
Values	Daily Returns

Enel Generacion Costanera  vs.  Apple Inc DRC

Enel Generacion Costanera

Risk-Adjusted Performance

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Enel Generacion Costanera are ranked lower than 4 (%) 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.

Apple Inc DRC

Risk-Adjusted Performance

Very Weak

Over the last 90 days Apple Inc DRC has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong basic indicators, Apple 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 Generacion and Apple

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

The idea behind Enel Generacion Costanera and Apple Inc DRC 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.

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 Insider Screener module to find insiders across different sectors to evaluate their impact on performance.