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 do 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
0.6 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Companhia and CPFL is 0.6. Overlapping area represents the amount of risk that can be diversified away by holding Companhia Energtica do 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 do 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 do is expected to under-perform the CPFL Energia. In addition to that, Companhia Energtica is 1.76 times more volatile than CPFL Energia SA. It trades about -0.09 of its total potential returns per unit of risk. CPFL Energia SA is currently generating about -0.03 per unit of volatility. If you would invest 3,440 in CPFL Energia SA on September 1, 2024 and sell it today you would lose (178.00) from holding CPFL Energia SA or give up 5.17% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 99.22% |
| Values | Daily Returns |
Companhia Energtica do 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. CPFL Energia SA | Companhia Energtica vs. Light SA | Companhia Energtica vs. Eneva SA | Companhia Energtica vs. Companhia de Gs |
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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 Funds Screener module to find actively-traded funds from around the world traded on over 30 global exchanges.
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