Correlation Between CP ALL and EDP -
Can any of the company-specific risk be diversified away by investing in both CP ALL and EDP - 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 CP ALL and EDP - into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between CP ALL Public and EDP Energias, you can compare the effects of market volatilities on CP ALL and EDP - 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 CP ALL with a short position of EDP -. Check out your portfolio center. Please also check ongoing floating volatility patterns of CP ALL and EDP -.
Diversification Opportunities for CP ALL and EDP -
Average diversification
The 3 months correlation between CVPBF and EDP is 0.11. Overlapping area represents the amount of risk that can be diversified away by holding CP ALL Public and EDP Energias in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on EDP Energias and CP ALL 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 CP ALL Public are associated (or correlated) with EDP -. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of EDP Energias has no effect on the direction of CP ALL i.e., CP ALL and EDP - go up and down completely randomly.
Pair Corralation between CP ALL and EDP -
Assuming the 90 days horizon CP ALL Public is expected to generate 2.15 times more return on investment than EDP -. However, CP ALL is 2.15 times more volatile than EDP Energias. It trades about 0.06 of its potential returns per unit of risk. EDP Energias is currently generating about -0.03 per unit of risk. If you would invest 169.00 in CP ALL Public on August 30, 2024 and sell it today you would earn a total of 37.00 from holding CP ALL Public or generate 21.89% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
CP ALL Public vs. EDP Energias
Performance |
| Timeline |
| CP ALL Public |
| EDP Energias |
CP ALL and EDP - Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with CP ALL and EDP -
The main advantage of trading using opposite CP ALL and EDP - positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if CP ALL position performs unexpectedly, EDP - 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 EDP - will offset losses from the drop in EDP -'s long position.The idea behind CP ALL Public and EDP Energias pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.| EDP - vs. CP ALL Public | EDP - vs. Niagara Mohawk Power | EDP - vs. The Siam Cement | EDP - vs. Oaktree Capital Group |
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 Correlation Analysis module to reduce portfolio risk simply by holding instruments which are not perfectly correlated.
Other Complementary Tools
| Theme Ratings Determine theme ratings based on digital equity recommendations. Macroaxis theme ratings are based on combination of fundamental analysis and risk-adjusted market performance | |
| Fundamentals Comparison Compare fundamentals across multiple equities to find investing opportunities | |
| Financial Widgets Easily integrated Macroaxis content with over 30 different plug-and-play financial widgets | |
| Global Markets Map Get a quick overview of global market snapshot using zoomable world map. Drill down to check world indexes | |
| Bollinger Bands Use Bollinger Bands indicator to analyze target price for a given investing horizon |