Correlation Between B3 SA and Energisa
Can any of the company-specific risk be diversified away by investing in both B3 SA and Energisa 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 B3 SA and Energisa into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between B3 SA and Energisa SA, you can compare the effects of market volatilities on B3 SA and Energisa 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 B3 SA with a short position of Energisa. Check out your portfolio center. Please also check ongoing floating volatility patterns of B3 SA and Energisa.
Diversification Opportunities for B3 SA and Energisa
Almost no diversification
The 3 months correlation between B3SA3 and Energisa is 0.94. Overlapping area represents the amount of risk that can be diversified away by holding B3 SA and Energisa SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Energisa SA and B3 SA 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 B3 SA are associated (or correlated) with Energisa. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Energisa SA has no effect on the direction of B3 SA i.e., B3 SA and Energisa go up and down completely randomly.
Pair Corralation between B3 SA and Energisa
Assuming the 90 days trading horizon B3 SA is expected to under-perform the Energisa. In addition to that, B3 SA is 1.31 times more volatile than Energisa SA. It trades about -0.01 of its total potential returns per unit of risk. Energisa SA is currently generating about 0.01 per unit of volatility. If you would invest 4,039 in Energisa SA on September 2, 2024 and sell it today you would lose (18.00) from holding Energisa SA or give up 0.45% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 99.2% |
| Values | Daily Returns |
B3 SA vs. Energisa SA
Performance |
| Timeline |
| B3 SA |
| Energisa SA |
B3 SA and Energisa Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with B3 SA and Energisa
The main advantage of trading using opposite B3 SA and Energisa positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if B3 SA position performs unexpectedly, Energisa 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 Energisa will offset losses from the drop in Energisa's long position.| B3 SA vs. Banco Bradesco SA | B3 SA vs. Petrleo Brasileiro SA | B3 SA vs. Ita Unibanco Holding | B3 SA vs. Itasa Investimentos |
| Energisa vs. Equatorial Energia SA | Energisa vs. CPFL Energia SA | Energisa vs. Eneva SA | Energisa vs. Companhia de Saneamento |
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 CEOs Directory module to screen CEOs from public companies around the world.
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