Correlation Between BBB Foods and Enel Chile

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Can any of the company-specific risk be diversified away by investing in both BBB Foods and Enel Chile 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 BBB Foods and Enel Chile into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between BBB Foods and Enel Chile SA, you can compare the effects of market volatilities on BBB Foods and Enel Chile 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 BBB Foods with a short position of Enel Chile. Check out your portfolio center. Please also check ongoing floating volatility patterns of BBB Foods and Enel Chile.

Diversification Opportunities for BBB Foods and Enel Chile

-0.29
  Correlation Coefficient

Very good diversification

The 3 months correlation between BBB and Enel is -0.29. Overlapping area represents the amount of risk that can be diversified away by holding BBB Foods and Enel Chile SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Enel Chile SA and BBB Foods 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 BBB Foods are associated (or correlated) with Enel Chile. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Enel Chile SA has no effect on the direction of BBB Foods i.e., BBB Foods and Enel Chile go up and down completely randomly.

Pair Corralation between BBB Foods and Enel Chile

Given the investment horizon of 90 days BBB Foods is expected to generate 1.29 times more return on investment than Enel Chile. However, BBB Foods is 1.29 times more volatile than Enel Chile SA. It trades about 0.08 of its potential returns per unit of risk. Enel Chile SA is currently generating about 0.09 per unit of risk. If you would invest  2,909  in BBB Foods on October 11, 2024 and sell it today you would earn a total of  101.00  from holding BBB Foods or generate 3.47% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Against 
StrengthInsignificant
Accuracy100.0%
ValuesDaily Returns

BBB Foods  vs.  Enel Chile SA

 Performance 
       Timeline  
BBB Foods 

Risk-Adjusted Performance

0 of 100

 
Weak
 
Strong
Very Weak
Over the last 90 days BBB Foods has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest fragile performance, the Stock's fundamental drivers remain strong and the current disturbance on Wall Street may also be a sign of long term gains for the company investors.
Enel Chile SA 

Risk-Adjusted Performance

6 of 100

 
Weak
 
Strong
Modest
Compared to the overall equity markets, risk-adjusted returns on investments in Enel Chile SA are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. In spite of rather weak forward indicators, Enel Chile may actually be approaching a critical reversion point that can send shares even higher in February 2025.

BBB Foods and Enel Chile Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with BBB Foods and Enel Chile

The main advantage of trading using opposite BBB Foods and Enel Chile positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if BBB Foods position performs unexpectedly, Enel Chile 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 Chile will offset losses from the drop in Enel Chile's long position.
The idea behind BBB Foods and Enel Chile 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.
Check out your portfolio center.
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 Piotroski F Score module to get Piotroski F Score based on the binary analysis strategy of nine different fundamentals.

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