Correlation Between CPFL Energia and Equatorial Energia
Can any of the company-specific risk be diversified away by investing in both CPFL Energia and Equatorial 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 CPFL Energia and Equatorial Energia 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 Equatorial Energia SA, you can compare the effects of market volatilities on CPFL Energia and Equatorial 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 CPFL Energia with a short position of Equatorial Energia. Check out your portfolio center. Please also check ongoing floating volatility patterns of CPFL Energia and Equatorial Energia.
Diversification Opportunities for CPFL Energia and Equatorial Energia
0.67 | Correlation Coefficient |
Poor diversification
The 3 months correlation between CPFL and Equatorial is 0.67. Overlapping area represents the amount of risk that can be diversified away by holding CPFL Energia SA and Equatorial Energia SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Equatorial Energia 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 Equatorial Energia. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Equatorial Energia has no effect on the direction of CPFL Energia i.e., CPFL Energia and Equatorial Energia go up and down completely randomly.
Pair Corralation between CPFL Energia and Equatorial Energia
Assuming the 90 days trading horizon CPFL Energia is expected to generate 1.13 times less return on investment than Equatorial Energia. In addition to that, CPFL Energia is 1.1 times more volatile than Equatorial Energia SA. It trades about 0.03 of its total potential returns per unit of risk. Equatorial Energia SA is currently generating about 0.04 per unit of volatility. If you would invest 2,589 in Equatorial Energia SA on August 28, 2024 and sell it today you would earn a total of 701.00 from holding Equatorial Energia SA or generate 27.08% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
CPFL Energia SA vs. Equatorial Energia SA
Performance |
| Timeline |
| CPFL Energia SA |
| Equatorial Energia |
CPFL Energia and Equatorial Energia Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with CPFL Energia and Equatorial Energia
The main advantage of trading using opposite CPFL Energia and Equatorial Energia positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if CPFL Energia position performs unexpectedly, Equatorial 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 Equatorial Energia will offset losses from the drop in Equatorial Energia'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 |
| Equatorial Energia vs. BB Seguridade Participacoes | Equatorial Energia vs. Engie Brasil Energia | Equatorial Energia vs. CTEEP Companhia | Equatorial 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 Earnings Calls module to check upcoming earnings announcements updated hourly across public exchanges.
Other Complementary Tools
| Competition Analyzer Analyze and compare many basic indicators for a group of related or unrelated entities | |
| Portfolio Manager State of the art Portfolio Manager to monitor and improve performance of your invested capital | |
| Piotroski F Score Get Piotroski F Score based on the binary analysis strategy of nine different fundamentals | |
| Idea Breakdown Analyze constituents of all Macroaxis ideas. Macroaxis investment ideas are predefined, sector-focused investing themes | |
| Investing Opportunities Build portfolios using our predefined set of ideas and optimize them against your investing preferences |