Correlation Between Corporacion Financiera and Berkeley Energia
Can any of the company-specific risk be diversified away by investing in both Corporacion Financiera and Berkeley Energia 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 Corporacion Financiera and Berkeley Energia into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Corporacion Financiera Alba and Berkeley Energia Limited, you can compare the effects of market volatilities on Corporacion Financiera and Berkeley Energia 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 Corporacion Financiera with a short position of Berkeley Energia. Check out your portfolio center. Please also check ongoing floating volatility patterns of Corporacion Financiera and Berkeley Energia.
Diversification Opportunities for Corporacion Financiera and Berkeley Energia
-0.38 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Corporacion and Berkeley is -0.38. Overlapping area represents the amount of risk that can be diversified away by holding Corporacion Financiera Alba and Berkeley Energia Limited in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Berkeley Energia and Corporacion Financiera 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 Corporacion Financiera Alba are associated (or correlated) with Berkeley Energia. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Berkeley Energia has no effect on the direction of Corporacion Financiera i.e., Corporacion Financiera and Berkeley Energia go up and down completely randomly.
Pair Corralation between Corporacion Financiera and Berkeley Energia
Assuming the 90 days trading horizon Corporacion Financiera Alba is expected to generate 2.4 times more return on investment than Berkeley Energia. However, Corporacion Financiera is 2.4 times more volatile than Berkeley Energia Limited. It trades about 0.09 of its potential returns per unit of risk. Berkeley Energia Limited is currently generating about 0.04 per unit of risk. If you would invest 5,010 in Corporacion Financiera Alba on November 2, 2024 and sell it today you would earn a total of 3,330 from holding Corporacion Financiera Alba or generate 66.47% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 99.06% |
| Values | Daily Returns |
Corporacion Financiera Alba vs. Berkeley Energia Limited
Performance |
| Timeline |
| Corporacion Financiera |
| Berkeley Energia |
Corporacion Financiera and Berkeley Energia Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Corporacion Financiera and Berkeley Energia
The main advantage of trading using opposite Corporacion Financiera and Berkeley Energia positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Corporacion Financiera position performs unexpectedly, Berkeley Energia 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 Berkeley Energia will offset losses from the drop in Berkeley Energia's long position.| Corporacion Financiera vs. Miquel y Costas | Corporacion Financiera vs. Grupo Catalana Occidente | Corporacion Financiera vs. Construcciones y Auxiliar | Corporacion Financiera vs. Prosegur |
| Berkeley Energia vs. Naturhouse Health SA | Berkeley Energia vs. Borges Agricultural Industrial | Berkeley Energia vs. NH Hoteles | Berkeley Energia vs. Arrienda Rental Properties |
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 Transaction History module to view history of all your transactions and understand their impact on performance.
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