Correlation Between Pampa Energía and TransAlta
Can any of the company-specific risk be diversified away by investing in both Pampa Energía and TransAlta 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 Pampa Energía and TransAlta into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Pampa Energa SA and TransAlta, you can compare the effects of market volatilities on Pampa Energía and TransAlta 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 Pampa Energía with a short position of TransAlta. Check out your portfolio center. Please also check ongoing floating volatility patterns of Pampa Energía and TransAlta.
Diversification Opportunities for Pampa Energía and TransAlta
0.79 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Pampa and TransAlta is 0.79. Overlapping area represents the amount of risk that can be diversified away by holding Pampa Energa SA and TransAlta in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on TransAlta and Pampa Energía 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 Pampa Energa SA are associated (or correlated) with TransAlta. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of TransAlta has no effect on the direction of Pampa Energía i.e., Pampa Energía and TransAlta go up and down completely randomly.
Pair Corralation between Pampa Energía and TransAlta
Assuming the 90 days trading horizon Pampa Energa SA is expected to generate 1.23 times more return on investment than TransAlta. However, Pampa Energía is 1.23 times more volatile than TransAlta. It trades about 0.17 of its potential returns per unit of risk. TransAlta is currently generating about 0.16 per unit of risk. If you would invest 4,520 in Pampa Energa SA on September 1, 2024 and sell it today you would earn a total of 3,780 from holding Pampa Energa SA or generate 83.63% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Pampa Energa SA vs. TransAlta
Performance |
| Timeline |
| Pampa Energa SA |
| TransAlta |
Pampa Energía and TransAlta Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Pampa Energía and TransAlta
The main advantage of trading using opposite Pampa Energía and TransAlta positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Pampa Energía position performs unexpectedly, TransAlta 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 TransAlta will offset losses from the drop in TransAlta's long position.| Pampa Energía vs. Singapore Telecommunications Limited | Pampa Energía vs. TROPHY GAMES DEV | Pampa Energía vs. COMBA TELECOM SYST | Pampa Energía vs. FRACTAL GAMING GROUP |
| TransAlta vs. Perseus Mining Limited | TransAlta vs. MCEWEN MINING INC | TransAlta vs. Grupo Carso SAB | TransAlta vs. Commercial Vehicle Group |
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 Equity Search module to search for actively traded equities including funds and ETFs from over 30 global markets.
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