Correlation Between Cadiz Depositary and Companhia Energetica
Can any of the company-specific risk be diversified away by investing in both Cadiz Depositary and Companhia Energetica 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 Cadiz Depositary and Companhia Energetica into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Cadiz Depositary Shares and Companhia Energetica de, you can compare the effects of market volatilities on Cadiz Depositary and Companhia Energetica 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 Cadiz Depositary with a short position of Companhia Energetica. Check out your portfolio center. Please also check ongoing floating volatility patterns of Cadiz Depositary and Companhia Energetica.
Diversification Opportunities for Cadiz Depositary and Companhia Energetica
-0.27 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Cadiz and Companhia is -0.27. Overlapping area represents the amount of risk that can be diversified away by holding Cadiz Depositary Shares and Companhia Energetica de in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Companhia Energetica and Cadiz Depositary 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 Cadiz Depositary Shares are associated (or correlated) with Companhia Energetica. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Companhia Energetica has no effect on the direction of Cadiz Depositary i.e., Cadiz Depositary and Companhia Energetica go up and down completely randomly.
Pair Corralation between Cadiz Depositary and Companhia Energetica
Assuming the 90 days horizon Cadiz Depositary Shares is expected to generate 0.54 times more return on investment than Companhia Energetica. However, Cadiz Depositary Shares is 1.85 times less risky than Companhia Energetica. It trades about 0.37 of its potential returns per unit of risk. Companhia Energetica de is currently generating about 0.11 per unit of risk. If you would invest 1,520 in Cadiz Depositary Shares on August 30, 2024 and sell it today you would earn a total of 171.00 from holding Cadiz Depositary Shares or generate 11.25% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Cadiz Depositary Shares vs. Companhia Energetica de
Performance |
| Timeline |
| Cadiz Depositary Shares |
| Companhia Energetica |
Cadiz Depositary and Companhia Energetica Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Cadiz Depositary and Companhia Energetica
The main advantage of trading using opposite Cadiz Depositary and Companhia Energetica positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Cadiz Depositary position performs unexpectedly, Companhia Energetica 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 Energetica will offset losses from the drop in Companhia Energetica's long position.| Cadiz Depositary vs. Atlanticus Holdings Corp | Cadiz Depositary vs. LifeMD Preferred Series | Cadiz Depositary vs. Aquagold International | Cadiz Depositary vs. Morningstar Unconstrained Allocation |
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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 Performance Analysis module to check effects of mean-variance optimization against your current asset allocation.
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