Correlation Between Connecticut Light and Centrais Elétricas
Can any of the company-specific risk be diversified away by investing in both Connecticut Light and Centrais Elétricas 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 Connecticut Light and Centrais Elétricas into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between The Connecticut Light and Centrais Eltricas Brasileiras, you can compare the effects of market volatilities on Connecticut Light and Centrais Elétricas 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 Connecticut Light with a short position of Centrais Elétricas. Check out your portfolio center. Please also check ongoing floating volatility patterns of Connecticut Light and Centrais Elétricas.
Diversification Opportunities for Connecticut Light and Centrais Elétricas
0.2 | Correlation Coefficient |
Modest diversification
The 3 months correlation between Connecticut and Centrais is 0.2. Overlapping area represents the amount of risk that can be diversified away by holding The Connecticut Light and Centrais Eltricas Brasileiras in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Centrais Elétricas and Connecticut Light 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 The Connecticut Light are associated (or correlated) with Centrais Elétricas. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Centrais Elétricas has no effect on the direction of Connecticut Light i.e., Connecticut Light and Centrais Elétricas go up and down completely randomly.
Pair Corralation between Connecticut Light and Centrais Elétricas
Assuming the 90 days horizon The Connecticut Light is expected to under-perform the Centrais Elétricas. In addition to that, Connecticut Light is 1.06 times more volatile than Centrais Eltricas Brasileiras. It trades about 0.0 of its total potential returns per unit of risk. Centrais Eltricas Brasileiras is currently generating about 0.0 per unit of volatility. If you would invest 797.00 in Centrais Eltricas Brasileiras on August 30, 2024 and sell it today you would lose (115.00) from holding Centrais Eltricas Brasileiras or give up 14.43% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 76.36% |
| Values | Daily Returns |
The Connecticut Light vs. Centrais Eltricas Brasileiras
Performance |
| Timeline |
| Connecticut Light |
| Centrais Elétricas |
Connecticut Light and Centrais Elétricas Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Connecticut Light and Centrais Elétricas
The main advantage of trading using opposite Connecticut Light and Centrais Elétricas positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Connecticut Light position performs unexpectedly, Centrais Elétricas 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 Centrais Elétricas will offset losses from the drop in Centrais Elétricas' long position.| Connecticut Light vs. Centrais Eltricas Brasileiras | Connecticut Light vs. Centrais Electricas Brasileiras | Connecticut Light vs. Enel Chile SA | Connecticut Light vs. Korea Electric Power |
| Centrais Elétricas vs. Nextera Energy | Centrais Elétricas vs. Consumers Energy | Centrais Elétricas vs. Duke Energy | Centrais Elétricas vs. Red Electrica Corporacion |
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 Stock Tickers module to use high-impact, comprehensive, and customizable stock tickers that can be easily integrated to any websites.
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