Correlation Between Banco Pan and Equatorial Energia
Can any of the company-specific risk be diversified away by investing in both Banco Pan and Equatorial 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 Banco Pan and Equatorial Energia into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Banco Pan SA and Equatorial Energia SA, you can compare the effects of market volatilities on Banco Pan and Equatorial 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 Banco Pan with a short position of Equatorial Energia. Check out your portfolio center. Please also check ongoing floating volatility patterns of Banco Pan and Equatorial Energia.
Diversification Opportunities for Banco Pan and Equatorial Energia
0.77 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Banco and Equatorial is 0.77. Overlapping area represents the amount of risk that can be diversified away by holding Banco Pan SA and Equatorial Energia SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Equatorial Energia and Banco Pan 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 Banco Pan SA are associated (or correlated) with Equatorial Energia. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Equatorial Energia has no effect on the direction of Banco Pan i.e., Banco Pan and Equatorial Energia go up and down completely randomly.
Pair Corralation between Banco Pan and Equatorial Energia
Assuming the 90 days trading horizon Banco Pan is expected to generate 1.08 times less return on investment than Equatorial Energia. In addition to that, Banco Pan is 1.35 times more volatile than Equatorial Energia SA. It trades about 0.25 of its total potential returns per unit of risk. Equatorial Energia SA is currently generating about 0.37 per unit of volatility. If you would invest 2,663 in Equatorial Energia SA on November 2, 2024 and sell it today you would earn a total of 389.00 from holding Equatorial Energia SA or generate 14.61% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Banco Pan SA vs. Equatorial Energia SA
Performance |
| Timeline |
| Banco Pan SA |
| Equatorial Energia |
Banco Pan and Equatorial Energia Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Banco Pan and Equatorial Energia
The main advantage of trading using opposite Banco Pan and Equatorial Energia positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Banco Pan position performs unexpectedly, Equatorial 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 Equatorial Energia will offset losses from the drop in Equatorial Energia's long position.| Banco Pan vs. Banco BTG Pactual | Banco Pan vs. Eneva SA | Banco Pan vs. Oi SA | Banco Pan vs. Movida Participaes SA |
| Equatorial Energia vs. Localiza Rent a | Equatorial Energia vs. Raia Drogasil SA | Equatorial Energia vs. Engie Brasil Energia | Equatorial Energia vs. Lojas Renner 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 Crypto Correlations module to use cryptocurrency correlation module to diversify your cryptocurrency portfolio across multiple coins.
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