Correlation Between ENCE Energa and Bankinter

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

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

Diversification Opportunities for ENCE Energa and Bankinter

0.65

Correlation Coefficient

ENCE Energa  Bankinter

Poor diversification

The 3 months correlation between ENCE and Bankinter is 0.65. Overlapping area represents the amount of risk that can be diversified away by holding ENCE Energa y and Bankinter in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Bankinter and ENCE Energa 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 ENCE Energa y are associated (or correlated) with Bankinter. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Bankinter has no effect on the direction of ENCE Energa i.e., ENCE Energa and Bankinter go up and down completely randomly.

Pair Corralation between ENCE Energa and Bankinter

Assuming the 90 days trading horizon ENCE Energa y is expected to generate 1.01 times more return on investment than Bankinter. However, ENCE Energa is 1.01 times more volatile than Bankinter. It trades about 0.19 of its potential returns per unit of risk. Bankinter is currently generating about 0.15 per unit of risk. If you would invest  281.00  in ENCE Energa y on October 20, 2024 and sell it today you would earn a total of  56.00  from holding ENCE Energa y or generate 19.93% return on investment over 90 days.

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

ENCE Energa y  vs.  Bankinter

ENCE Energa y

Risk-Adjusted Performance

15 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in ENCE Energa y are ranked lower than 15 (%) of all global equities and portfolios over the last 90 days. In spite of rather unsteady fundamental indicators, ENCE Energa exhibited solid returns over the last few months and may actually be approaching a breakup point.

Bankinter

Risk-Adjusted Performance

11 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Bankinter are ranked lower than 11 (%) of all global equities and portfolios over the last 90 days. In spite of rather unsteady basic indicators, Bankinter exhibited solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with ENCE Energa and Bankinter

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

The idea behind ENCE Energa y and Bankinter 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 Portfolio Manager module to state of the art Portfolio Manager to monitor and improve performance of your invested capital.