Correlation Between ENEL Societa and Enel SpA

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

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

Diversification Opportunities for ENEL Societa and Enel SpA

0.98

Correlation Coefficient

ENEL Societa  Enel SpA

Almost no diversification

The 3 months correlation between ENEL and Enel is 0.98. Overlapping area represents the amount of risk that can be diversified away by holding ENEL Societa per and Enel SpA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Enel SpA and ENEL Societa 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 ENEL Societa per are associated (or correlated) with Enel SpA. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Enel SpA has no effect on the direction of ENEL Societa i.e., ENEL Societa and Enel SpA go up and down completely randomly.

Pair Corralation between ENEL Societa and Enel SpA

Assuming the 90 days horizon ENEL Societa is expected to generate 1.21 times less return on investment than Enel SpA. But when comparing it to its historical volatility, ENEL Societa per is 1.8 times less risky than Enel SpA. It trades about 0.05 of its potential returns per unit of risk. Enel SpA is currently generating about 0.04 of returns per unit of risk over similar time horizon. If you would invest  537.00  in Enel SpA on September 28, 2024 and sell it today you would earn a total of  174.00  from holding Enel SpA or generate 32.4% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Strong
Accuracy	98.59%
Values	Daily Returns

ENEL Societa per  vs.  Enel SpA

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 latest unsteady performance, the Stock's basic indicators remain strong and the current disturbance on Wall Street may also be a sign of long term gains for the company investors.

Enel SpA

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Enel SpA has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest weak performance, the Stock's fundamental indicators remain stable and the current disturbance on Wall Street may also be a sign of long-run gains for the company stockholders.

Pair Trading with ENEL Societa and Enel SpA

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

The idea behind ENEL Societa per and Enel SpA 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.