Correlation Between CPFL Energia and Eneva SA
Can any of the company-specific risk be diversified away by investing in both CPFL Energia and Eneva SA 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 CPFL Energia and Eneva SA into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between CPFL Energia SA and Eneva SA, you can compare the effects of market volatilities on CPFL Energia and Eneva SA 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 CPFL Energia with a short position of Eneva SA. Check out your portfolio center. Please also check ongoing floating volatility patterns of CPFL Energia and Eneva SA.
Diversification Opportunities for CPFL Energia and Eneva SA
0.55 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between CPFL and Eneva is 0.55. Overlapping area represents the amount of risk that can be diversified away by holding CPFL Energia SA and Eneva SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Eneva SA and CPFL Energia 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 CPFL Energia SA are associated (or correlated) with Eneva SA. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Eneva SA has no effect on the direction of CPFL Energia i.e., CPFL Energia and Eneva SA go up and down completely randomly.
Pair Corralation between CPFL Energia and Eneva SA
Assuming the 90 days trading horizon CPFL Energia SA is expected to generate 0.77 times more return on investment than Eneva SA. However, CPFL Energia SA is 1.29 times less risky than Eneva SA. It trades about 0.01 of its potential returns per unit of risk. Eneva SA is currently generating about -0.16 per unit of risk. If you would invest 3,304 in CPFL Energia SA on August 28, 2024 and sell it today you would earn a total of 11.00 from holding CPFL Energia SA or generate 0.33% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
CPFL Energia SA vs. Eneva SA
Performance |
| Timeline |
| CPFL Energia SA |
| Eneva SA |
CPFL Energia and Eneva SA Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with CPFL Energia and Eneva SA
The main advantage of trading using opposite CPFL Energia and Eneva SA positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if CPFL Energia position performs unexpectedly, Eneva SA 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 Eneva SA will offset losses from the drop in Eneva SA's long position.| CPFL Energia vs. BB Seguridade Participacoes | CPFL Energia vs. Engie Brasil Energia | CPFL Energia vs. CTEEP Companhia | CPFL Energia vs. Itasa Investimentos |
| Eneva SA vs. BB Seguridade Participacoes | Eneva SA vs. Engie Brasil Energia | Eneva SA vs. CTEEP Companhia | Eneva SA 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 Bollinger Bands module to use Bollinger Bands indicator to analyze target price for a given investing horizon.
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