Correlation Between EON SE and ENEL Societa

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

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

Diversification Opportunities for EON SE and ENEL Societa

0.71

Correlation Coefficient

EON SE  ENEL Societa

Poor diversification

The 3 months correlation between EON and ENEL is 0.71. Overlapping area represents the amount of risk that can be diversified away by holding EON SE and ENEL Societa per in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ENEL Societa per and EON SE 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 EON SE are associated (or correlated) with ENEL Societa. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of ENEL Societa per has no effect on the direction of EON SE i.e., EON SE and ENEL Societa go up and down completely randomly.

Pair Corralation between EON SE and ENEL Societa

Assuming the 90 days horizon EON SE is expected to under-perform the ENEL Societa. In addition to that, EON SE is 2.11 times more volatile than ENEL Societa per. It trades about -0.08 of its total potential returns per unit of risk. ENEL Societa per is currently generating about 0.37 per unit of volatility. If you would invest  700.00  in ENEL Societa per on October 20, 2024 and sell it today you would earn a total of  41.00  from holding ENEL Societa per or generate 5.86% return on investment over 90 days.

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

EON SE  vs.  ENEL Societa per

EON SE

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days EON SE has generated negative risk-adjusted returns adding no value to investors with long positions. Despite fragile performance in the last few months, the Stock's forward-looking signals remain nearly stable which may send shares a bit higher in February 2025. The current disturbance may also be a sign of long-run up-swing for the company stockholders.

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 fairly strong basic indicators, ENEL Societa is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with EON SE and ENEL Societa

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

The idea behind EON SE and ENEL Societa per 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 Money Managers module to screen money managers from public funds and ETFs managed around the world.