Correlation Between Charwood Energy and Voltalia
Can any of the company-specific risk be diversified away by investing in both Charwood Energy and Voltalia 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 Charwood Energy and Voltalia into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Charwood Energy SA and Voltalia SA, you can compare the effects of market volatilities on Charwood Energy and Voltalia 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 Charwood Energy with a short position of Voltalia. Check out your portfolio center. Please also check ongoing floating volatility patterns of Charwood Energy and Voltalia.
Diversification Opportunities for Charwood Energy and Voltalia
0.4 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Charwood and Voltalia is 0.4. Overlapping area represents the amount of risk that can be diversified away by holding Charwood Energy SA and Voltalia SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Voltalia SA and Charwood Energy 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 Charwood Energy SA are associated (or correlated) with Voltalia. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Voltalia SA has no effect on the direction of Charwood Energy i.e., Charwood Energy and Voltalia go up and down completely randomly.
Pair Corralation between Charwood Energy and Voltalia
Assuming the 90 days trading horizon Charwood Energy SA is expected to under-perform the Voltalia. But the stock apears to be less risky and, when comparing its historical volatility, Charwood Energy SA is 1.47 times less risky than Voltalia. The stock trades about -0.05 of its potential returns per unit of risk. The Voltalia SA is currently generating about -0.01 of returns per unit of risk over similar time horizon. If you would invest 930.00 in Voltalia SA on September 14, 2024 and sell it today you would lose (219.00) from holding Voltalia SA or give up 23.55% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 99.64% |
| Values | Daily Returns |
Charwood Energy SA vs. Voltalia SA
Performance |
| Timeline |
| Charwood Energy SA |
| Voltalia SA |
Charwood Energy and Voltalia Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Charwood Energy and Voltalia
The main advantage of trading using opposite Charwood Energy and Voltalia positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Charwood Energy position performs unexpectedly, Voltalia 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 Voltalia will offset losses from the drop in Voltalia's long position.| Charwood Energy vs. Voltalia SA | Charwood Energy vs. Waga Energy SA | Charwood Energy vs. Haffner Energy SA | Charwood Energy vs. OVH Groupe SAS |
| Voltalia vs. Vinci SA | Voltalia vs. Compagnie de Saint Gobain | Voltalia vs. Bouygues SA | Voltalia vs. Engie SA |
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 AI Portfolio Architect module to use AI to generate optimal portfolios and find profitable investment opportunities.
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