Correlation Between FREEPORT and Enel Chile

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

By analyzing existing cross correlation between FREEPORT MCMORAN INC 4375 and Enel Chile SA, you can compare the effects of market volatilities on FREEPORT 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 FREEPORT with a short position of Enel Chile. Check out your portfolio center. Please also check ongoing floating volatility patterns of FREEPORT and Enel Chile.

Diversification Opportunities for FREEPORT and Enel Chile

-0.5

Correlation Coefficient

FREEPORT  Enel Chile

Very good diversification

The 3 months correlation between FREEPORT and Enel is -0.5. Overlapping area represents the amount of risk that can be diversified away by holding FREEPORT MCMORAN INC 4375 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 FREEPORT 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 FREEPORT MCMORAN INC 4375 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 FREEPORT i.e., FREEPORT and Enel Chile go up and down completely randomly.

Pair Corralation between FREEPORT and Enel Chile

Assuming the 90 days trading horizon FREEPORT MCMORAN INC 4375 is expected to under-perform the Enel Chile. But the bond apears to be less risky and, when comparing its historical volatility, FREEPORT MCMORAN INC 4375 is 2.8 times less risky than Enel Chile. The bond trades about -0.05 of its potential returns per unit of risk. The Enel Chile SA is currently generating about 0.04 of returns per unit of risk over similar time horizon. If you would invest  279.00  in Enel Chile SA on September 25, 2024 and sell it today you would earn a total of  19.00  from holding Enel Chile SA or generate 6.81% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	96.83%
Values	Daily Returns

FREEPORT MCMORAN INC 4375  vs.  Enel Chile SA

FREEPORT MCMORAN INC

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days FREEPORT MCMORAN INC 4375 has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong basic indicators, FREEPORT is not utilizing all of its potentials. The latest stock price disturbance, may contribute to short-term losses for the investors.

Enel Chile SA

Risk-Adjusted Performance

6 of 100

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 unsteady forward indicators, Enel Chile may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Pair Trading with FREEPORT and Enel Chile

The main advantage of trading using opposite FREEPORT and Enel Chile positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if FREEPORT 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 FREEPORT MCMORAN INC 4375 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.

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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.