Correlation Between ENCE Energa and Grifols SA

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

Diversification Opportunities for ENCE Energa and Grifols SA

-0.39

Correlation Coefficient

ENCE Energa  Grifols SA

Very good diversification

The 3 months correlation between ENCE and Grifols is -0.39. Overlapping area represents the amount of risk that can be diversified away by holding ENCE Energa y and Grifols SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Grifols SA 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 Grifols SA. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Grifols SA has no effect on the direction of ENCE Energa i.e., ENCE Energa and Grifols SA go up and down completely randomly.

Pair Corralation between ENCE Energa and Grifols SA

Assuming the 90 days trading horizon ENCE Energa y is expected to generate 0.53 times more return on investment than Grifols SA. However, ENCE Energa y is 1.87 times less risky than Grifols SA. It trades about 0.04 of its potential returns per unit of risk. Grifols SA is currently generating about 0.0 per unit of risk. If you would invest  256.00  in ENCE Energa y on October 26, 2024 and sell it today you would earn a total of  86.00  from holding ENCE Energa y or generate 33.59% return on investment over 90 days.

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

ENCE Energa y  vs.  Grifols SA

ENCE Energa y

Risk-Adjusted Performance

16 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in ENCE Energa y are ranked lower than 16 (%) of all global equities and portfolios over the last 90 days. In spite of rather weak fundamental indicators, ENCE Energa exhibited solid returns over the last few months and may actually be approaching a breakup point.

Grifols SA

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Grifols SA has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest unsteady performance, the Stock's technical and fundamental indicators remain sound and the latest tumult on Wall Street may also be a sign of longer-term gains for the firm shareholders.

Pair Trading with ENCE Energa and Grifols SA

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

The idea behind ENCE Energa y and Grifols SA 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.