Correlation Between Repsol and Enags SA

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

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

Diversification Opportunities for Repsol and Enags SA

0.65

Correlation Coefficient

Repsol  Enags SA

Poor diversification

The 3 months correlation between Repsol and Enags is 0.65. Overlapping area represents the amount of risk that can be diversified away by holding Repsol and Enags SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Enags SA and Repsol 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 Repsol 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 Repsol i.e., Repsol and Enags SA go up and down completely randomly.

Pair Corralation between Repsol and Enags SA

Assuming the 90 days trading horizon Repsol is expected to generate 1.27 times more return on investment than Enags SA. However, Repsol is 1.27 times more volatile than Enags SA. It trades about 0.4 of its potential returns per unit of risk. Enags SA is currently generating about 0.08 per unit of risk. If you would invest  992.00  in Repsol on April 22, 2025 and sell it today you would earn a total of  317.00  from holding Repsol or generate 31.96% return on investment over 90 days.

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

Repsol  vs.  Enags SA

Repsol

Risk-Adjusted Performance

Very Strong

Compared to the overall equity markets, risk-adjusted returns on investments in Repsol are ranked lower than 31 (%) of all global equities and portfolios over the last 90 days. In spite of rather unsteady basic indicators, Repsol exhibited solid returns over the last few months and may actually be approaching a breakup point.

Enags SA

Risk-Adjusted Performance

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Enags SA are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. In spite of rather sound technical and fundamental indicators, Enags SA is not utilizing all of its potentials. The latest stock price tumult, may contribute to shorter-term losses for the shareholders.

Pair Trading with Repsol and Enags SA

The main advantage of trading using opposite Repsol and Enags SA positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Repsol 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 Repsol 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 Commodity Channel module to use Commodity Channel Index to analyze current equity momentum.