Correlation Between Endesa SA and Grupo Media

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

By analyzing existing cross correlation between Endesa SA and Grupo Media Capital, you can compare the effects of market volatilities on Endesa SA and Grupo Media 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 Grupo Media. Check out your portfolio center. Please also check ongoing floating volatility patterns of Endesa SA and Grupo Media.

Diversification Opportunities for Endesa SA and Grupo Media

0.53

Correlation Coefficient

Endesa SA  Grupo Media

Very weak diversification

The 3 months correlation between Endesa and Grupo is 0.53. Overlapping area represents the amount of risk that can be diversified away by holding Endesa SA and Grupo Media Capital in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Grupo Media Capital 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 Grupo Media. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Grupo Media Capital has no effect on the direction of Endesa SA i.e., Endesa SA and Grupo Media go up and down completely randomly.

Pair Corralation between Endesa SA and Grupo Media

If you would invest  107.00  in Grupo Media Capital on October 9, 2024 and sell it today you would earn a total of  0.00  from holding Grupo Media Capital or generate 0.0% return on investment over 90 days.

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

Endesa SA  vs.  Grupo Media Capital

Endesa SA

Risk-Adjusted Performance

8 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Endesa SA are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively unfluctuating basic indicators, Endesa SA may actually be approaching a critical reversion point that can send shares even higher in February 2025.

Grupo Media Capital

Risk-Adjusted Performance

10 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Grupo Media Capital are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively fragile basic indicators, Grupo Media may actually be approaching a critical reversion point that can send shares even higher in February 2025.

Pair Trading with Endesa SA and Grupo Media

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

The idea behind Endesa SA and Grupo Media Capital 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 Watchlist Optimization module to optimize watchlists to build efficient portfolios or rebalance existing positions based on the mean-variance optimization algorithm.