Correlation Between BB Seguridade and Companhia Energtica
Can any of the company-specific risk be diversified away by investing in both BB Seguridade and Companhia Energtica 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 BB Seguridade and Companhia Energtica into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between BB Seguridade Participacoes and Companhia Energtica de, you can compare the effects of market volatilities on BB Seguridade and Companhia Energtica 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 BB Seguridade with a short position of Companhia Energtica. Check out your portfolio center. Please also check ongoing floating volatility patterns of BB Seguridade and Companhia Energtica.
Diversification Opportunities for BB Seguridade and Companhia Energtica
0.32 | Correlation Coefficient |
Weak diversification
The 3 months correlation between BBSE3 and Companhia is 0.32. Overlapping area represents the amount of risk that can be diversified away by holding BB Seguridade Participacoes and Companhia Energtica de in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Companhia Energtica and BB Seguridade 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 BB Seguridade Participacoes are associated (or correlated) with Companhia Energtica. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Companhia Energtica has no effect on the direction of BB Seguridade i.e., BB Seguridade and Companhia Energtica go up and down completely randomly.
Pair Corralation between BB Seguridade and Companhia Energtica
Assuming the 90 days trading horizon BB Seguridade Participacoes is expected to under-perform the Companhia Energtica. But the stock apears to be less risky and, when comparing its historical volatility, BB Seguridade Participacoes is 1.94 times less risky than Companhia Energtica. The stock trades about -0.04 of its potential returns per unit of risk. The Companhia Energtica de is currently generating about 0.11 of returns per unit of risk over similar time horizon. If you would invest 1,129 in Companhia Energtica de on August 28, 2024 and sell it today you would earn a total of 48.00 from holding Companhia Energtica de or generate 4.25% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
BB Seguridade Participacoes vs. Companhia Energtica de
Performance |
| Timeline |
| BB Seguridade Partic |
| Companhia Energtica |
BB Seguridade and Companhia Energtica Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with BB Seguridade and Companhia Energtica
The main advantage of trading using opposite BB Seguridade and Companhia Energtica positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if BB Seguridade position performs unexpectedly, Companhia Energtica 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 Companhia Energtica will offset losses from the drop in Companhia Energtica's long position.| BB Seguridade vs. Transmissora Aliana de | BB Seguridade vs. Banco do Brasil | BB Seguridade vs. Itasa Investimentos | BB Seguridade vs. Engie Brasil Energia |
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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 ETF Categories module to list of ETF categories grouped based on various criteria, such as the investment strategy or type of investments.
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