Correlation Between Centrais Eltricas and Avangrid
Can any of the company-specific risk be diversified away by investing in both Centrais Eltricas and Avangrid 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 Centrais Eltricas and Avangrid into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Centrais Eltricas Brasileiras and Avangrid, you can compare the effects of market volatilities on Centrais Eltricas and Avangrid 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 Centrais Eltricas with a short position of Avangrid. Check out your portfolio center. Please also check ongoing floating volatility patterns of Centrais Eltricas and Avangrid.
Diversification Opportunities for Centrais Eltricas and Avangrid
-0.62 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Centrais and Avangrid is -0.62. Overlapping area represents the amount of risk that can be diversified away by holding Centrais Eltricas Brasileiras and Avangrid in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Avangrid and Centrais Eltricas 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 Centrais Eltricas Brasileiras are associated (or correlated) with Avangrid. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Avangrid has no effect on the direction of Centrais Eltricas i.e., Centrais Eltricas and Avangrid go up and down completely randomly.
Pair Corralation between Centrais Eltricas and Avangrid
Assuming the 90 days horizon Centrais Eltricas Brasileiras is expected to under-perform the Avangrid. In addition to that, Centrais Eltricas is 9.75 times more volatile than Avangrid. It trades about -0.1 of its total potential returns per unit of risk. Avangrid is currently generating about 0.14 per unit of volatility. If you would invest 3,532 in Avangrid on September 15, 2024 and sell it today you would earn a total of 27.00 from holding Avangrid or generate 0.76% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Centrais Eltricas Brasileiras vs. Avangrid
Performance |
| Timeline |
| Centrais Eltricas |
| Avangrid |
Centrais Eltricas and Avangrid Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Centrais Eltricas and Avangrid
The main advantage of trading using opposite Centrais Eltricas and Avangrid positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Centrais Eltricas position performs unexpectedly, Avangrid 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 Avangrid will offset losses from the drop in Avangrid's long position.| Centrais Eltricas vs. Nextera Energy | Centrais Eltricas vs. Consumers Energy | Centrais Eltricas vs. Duke Energy | Centrais Eltricas vs. Red Electrica Corporacion |
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 Top Crypto Exchanges module to search and analyze digital assets across top global cryptocurrency exchanges.
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