Correlation Between Endesa SA and Apple

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

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

Diversification Opportunities for Endesa SA and Apple

0.76

Correlation Coefficient

Endesa SA  Apple

Poor diversification

The 3 months correlation between Endesa and Apple is 0.76. Overlapping area represents the amount of risk that can be diversified away by holding Endesa SA and Apple Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Apple Inc and Endesa SA 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 Endesa SA 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 has no effect on the direction of Endesa SA i.e., Endesa SA and Apple go up and down completely randomly.

Pair Corralation between Endesa SA and Apple

Assuming the 90 days trading horizon Endesa SA is expected to generate 5.21 times less return on investment than Apple. But when comparing it to its historical volatility, Endesa SA is 1.23 times less risky than Apple. It trades about 0.05 of its potential returns per unit of risk. Apple Inc is currently generating about 0.22 of returns per unit of risk over similar time horizon. If you would invest  19,413  in Apple Inc on September 17, 2024 and sell it today you would earn a total of  4,202  from holding Apple Inc or generate 21.65% return on investment over 90 days.

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

Endesa SA  vs.  Apple Inc

Endesa SA

Risk-Adjusted Performance

4 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Endesa SA are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively stable basic indicators, Endesa SA is not utilizing all of its potentials. The newest stock price uproar, may contribute to short-horizon losses for the private investors.

Apple Inc

Risk-Adjusted Performance

17 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Apple Inc are ranked lower than 17 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively fragile fundamental indicators, Apple unveiled solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Endesa SA and Apple

The main advantage of trading using opposite Endesa SA and Apple positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Endesa SA 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 Endesa SA and Apple Inc 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 Stock Screener module to find equities using a custom stock filter or screen asymmetry in trading patterns, price, volume, or investment outlook..