Correlation Between CPFL Energia and Plano Plano
Can any of the company-specific risk be diversified away by investing in both CPFL Energia and Plano Plano 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 Plano Plano 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 Plano Plano Desenvolvimento, you can compare the effects of market volatilities on CPFL Energia and Plano Plano 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 Plano Plano. Check out your portfolio center. Please also check ongoing floating volatility patterns of CPFL Energia and Plano Plano.
Diversification Opportunities for CPFL Energia and Plano Plano
0.28 | Correlation Coefficient |
Modest diversification
The 3 months correlation between CPFL and Plano is 0.28. Overlapping area represents the amount of risk that can be diversified away by holding CPFL Energia SA and Plano Plano Desenvolvimento in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Plano Plano Desenvol 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 Plano Plano. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Plano Plano Desenvol has no effect on the direction of CPFL Energia i.e., CPFL Energia and Plano Plano go up and down completely randomly.
Pair Corralation between CPFL Energia and Plano Plano
Assuming the 90 days trading horizon CPFL Energia is expected to generate 8.82 times less return on investment than Plano Plano. But when comparing it to its historical volatility, CPFL Energia SA is 3.38 times less risky than Plano Plano. It trades about 0.14 of its potential returns per unit of risk. Plano Plano Desenvolvimento is currently generating about 0.37 of returns per unit of risk over similar time horizon. If you would invest 806.00 in Plano Plano Desenvolvimento on November 18, 2024 and sell it today you would earn a total of 279.00 from holding Plano Plano Desenvolvimento or generate 34.62% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
CPFL Energia SA vs. Plano Plano Desenvolvimento
Performance |
| Timeline |
| CPFL Energia SA |
| Plano Plano Desenvol |
CPFL Energia and Plano Plano Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with CPFL Energia and Plano Plano
The main advantage of trading using opposite CPFL Energia and Plano Plano positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if CPFL Energia position performs unexpectedly, Plano Plano 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 Plano Plano will offset losses from the drop in Plano Plano's long position.| CPFL Energia vs. The Hartford Financial | CPFL Energia vs. NXP Semiconductors NV | CPFL Energia vs. Autohome | CPFL Energia vs. Check Point Software |
| Plano Plano vs. Take Two Interactive Software | Plano Plano vs. BIONTECH SE DRN | Plano Plano vs. Akamai Technologies, | Plano Plano vs. METISA Metalrgica Timboense |
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 Portfolio Suggestion module to get suggestions outside of your existing asset allocation including your own model portfolios.
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