Correlation Between CPFL Energia and CTEEP Companhia
Can any of the company-specific risk be diversified away by investing in both CPFL Energia and CTEEP Companhia 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 CTEEP Companhia 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 CTEEP Companhia, you can compare the effects of market volatilities on CPFL Energia and CTEEP Companhia 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 CTEEP Companhia. Check out your portfolio center. Please also check ongoing floating volatility patterns of CPFL Energia and CTEEP Companhia.
Diversification Opportunities for CPFL Energia and CTEEP Companhia
0.16 | Correlation Coefficient |
Average diversification
The 3 months correlation between CPFL and CTEEP is 0.16. Overlapping area represents the amount of risk that can be diversified away by holding CPFL Energia SA and CTEEP Companhia in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on CTEEP Companhia 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 CTEEP Companhia. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of CTEEP Companhia has no effect on the direction of CPFL Energia i.e., CPFL Energia and CTEEP Companhia go up and down completely randomly.
Pair Corralation between CPFL Energia and CTEEP Companhia
Assuming the 90 days trading horizon CPFL Energia is expected to generate 1.06 times less return on investment than CTEEP Companhia. But when comparing it to its historical volatility, CPFL Energia SA is 1.28 times less risky than CTEEP Companhia. It trades about 0.14 of its potential returns per unit of risk. CTEEP Companhia is currently generating about 0.12 of returns per unit of risk over similar time horizon. If you would invest 2,295 in CTEEP Companhia on November 18, 2024 and sell it today you would earn a total of 83.00 from holding CTEEP Companhia or generate 3.62% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
CPFL Energia SA vs. CTEEP Companhia
Performance |
| Timeline |
| CPFL Energia SA |
| CTEEP Companhia |
CPFL Energia and CTEEP Companhia Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with CPFL Energia and CTEEP Companhia
The main advantage of trading using opposite CPFL Energia and CTEEP Companhia positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if CPFL Energia position performs unexpectedly, CTEEP Companhia 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 CTEEP Companhia will offset losses from the drop in CTEEP Companhia'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 |
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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 Portfolio Comparator module to compare the composition, asset allocations and performance of any two portfolios in your account.
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