Correlation Between Ferrovial and Enags SA

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

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

Diversification Opportunities for Ferrovial and Enags SA

0.03

Correlation Coefficient

Ferrovial  Enags SA

Significant diversification

The 3 months correlation between Ferrovial and Enags is 0.03. Overlapping area represents the amount of risk that can be diversified away by holding Ferrovial SA and Enags SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Enags SA and Ferrovial 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 Ferrovial SA are associated (or correlated) with Enags SA. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Enags SA has no effect on the direction of Ferrovial i.e., Ferrovial and Enags SA go up and down completely randomly.

Pair Corralation between Ferrovial and Enags SA

Assuming the 90 days trading horizon Ferrovial is expected to generate 4.28 times less return on investment than Enags SA. But when comparing it to its historical volatility, Ferrovial SA is 1.05 times less risky than Enags SA. It trades about 0.04 of its potential returns per unit of risk. Enags SA is currently generating about 0.17 of returns per unit of risk over similar time horizon. If you would invest  1,167  in Enags SA on December 30, 2024 and sell it today you would earn a total of  162.00  from holding Enags SA or generate 13.88% return on investment over 90 days.

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

Ferrovial SA  vs.  Enags SA

Ferrovial SA

Risk-Adjusted Performance

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Ferrovial SA are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. In spite of rather sound basic indicators, Ferrovial is not utilizing all of its potentials. The latest stock price tumult, may contribute to shorter-term losses for the shareholders.

Enags SA

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Enags SA are ranked lower than 13 (%) of all global equities and portfolios over the last 90 days. In spite of rather unsteady technical and fundamental indicators, Enags SA exhibited solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Ferrovial and Enags SA

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

The idea behind Ferrovial SA and Enags 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 Investing Opportunities module to build portfolios using our predefined set of ideas and optimize them against your investing preferences.