Correlation Between Companhia Energtica and CPFL Energia
Can any of the company-specific risk be diversified away by investing in both Companhia Energtica and CPFL 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 Companhia Energtica and CPFL Energia into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Companhia Energtica de and CPFL Energia SA, you can compare the effects of market volatilities on Companhia Energtica and CPFL 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 Companhia Energtica with a short position of CPFL Energia. Check out your portfolio center. Please also check ongoing floating volatility patterns of Companhia Energtica and CPFL Energia.
Diversification Opportunities for Companhia Energtica and CPFL Energia
0.25 | Correlation Coefficient |
Modest diversification
The 3 months correlation between Companhia and CPFL is 0.25. Overlapping area represents the amount of risk that can be diversified away by holding Companhia Energtica de and CPFL Energia SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on CPFL Energia SA and Companhia Energtica 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 Companhia Energtica de are associated (or correlated) with CPFL Energia. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of CPFL Energia SA has no effect on the direction of Companhia Energtica i.e., Companhia Energtica and CPFL Energia go up and down completely randomly.
Pair Corralation between Companhia Energtica and CPFL Energia
Assuming the 90 days trading horizon Companhia Energtica de is expected to generate 2.77 times more return on investment than CPFL Energia. However, Companhia Energtica is 2.77 times more volatile than CPFL Energia SA. It trades about 0.11 of its potential returns per unit of risk. CPFL Energia SA is currently generating about 0.05 per unit of risk. 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 |
Companhia Energtica de vs. CPFL Energia SA
Performance |
| Timeline |
| Companhia Energtica |
| CPFL Energia SA |
Companhia Energtica and CPFL Energia Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Companhia Energtica and CPFL Energia
The main advantage of trading using opposite Companhia Energtica and CPFL Energia positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Companhia Energtica position performs unexpectedly, CPFL 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 CPFL Energia will offset losses from the drop in CPFL Energia's long position.| Companhia Energtica vs. Usinas Siderrgicas de | Companhia Energtica vs. Companhia Siderrgica Nacional | Companhia Energtica vs. Gerdau SA | Companhia Energtica vs. Companhia Paranaense de |
| CPFL Energia vs. BB Seguridade Participacoes | CPFL Energia vs. Engie Brasil Energia | CPFL Energia vs. CTEEP Companhia | CPFL Energia vs. Itasa Investimentos |
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 Equity Valuation module to check real value of public entities based on technical and fundamental data.
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