Correlation Between Distribuidora and Rigolleau
Can any of the company-specific risk be diversified away by investing in both Distribuidora and Rigolleau 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 Distribuidora and Rigolleau into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Distribuidora de Gas and Rigolleau SA, you can compare the effects of market volatilities on Distribuidora and Rigolleau 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 Distribuidora with a short position of Rigolleau. Check out your portfolio center. Please also check ongoing floating volatility patterns of Distribuidora and Rigolleau.
Diversification Opportunities for Distribuidora and Rigolleau
0.78 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Distribuidora and Rigolleau is 0.78. Overlapping area represents the amount of risk that can be diversified away by holding Distribuidora de Gas and Rigolleau SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Rigolleau SA and Distribuidora 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 Distribuidora de Gas are associated (or correlated) with Rigolleau. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Rigolleau SA has no effect on the direction of Distribuidora i.e., Distribuidora and Rigolleau go up and down completely randomly.
Pair Corralation between Distribuidora and Rigolleau
Assuming the 90 days trading horizon Distribuidora de Gas is expected to generate 1.58 times more return on investment than Rigolleau. However, Distribuidora is 1.58 times more volatile than Rigolleau SA. It trades about 0.15 of its potential returns per unit of risk. Rigolleau SA is currently generating about 0.11 per unit of risk. If you would invest 19,825 in Distribuidora de Gas on September 25, 2024 and sell it today you would earn a total of 187,675 from holding Distribuidora de Gas or generate 946.66% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Distribuidora de Gas vs. Rigolleau SA
Performance |
| Timeline |
| Distribuidora de Gas |
| Rigolleau SA |
Distribuidora and Rigolleau Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Distribuidora and Rigolleau
The main advantage of trading using opposite Distribuidora and Rigolleau positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Distribuidora position performs unexpectedly, Rigolleau 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 Rigolleau will offset losses from the drop in Rigolleau's long position.| Distribuidora vs. Naturgy BAN SA | Distribuidora vs. Transportadora de Gas | Distribuidora vs. Fiplasto SA | Distribuidora vs. BBVA Banco Frances |
| Rigolleau vs. Transportadora de Gas | Rigolleau vs. Harmony Gold Mining | Rigolleau vs. United States Steel |
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 Fundamentals Comparison module to compare fundamentals across multiple equities to find investing opportunities.
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