Correlation Between Centrais Elétricas and Connecticut Light
Can any of the company-specific risk be diversified away by investing in both Centrais Elétricas and Connecticut Light 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 Elétricas and Connecticut Light 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 The Connecticut Light, you can compare the effects of market volatilities on Centrais Elétricas and Connecticut Light 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 Elétricas with a short position of Connecticut Light. Check out your portfolio center. Please also check ongoing floating volatility patterns of Centrais Elétricas and Connecticut Light.
Diversification Opportunities for Centrais Elétricas and Connecticut Light
-0.06 | Correlation Coefficient |
Good diversification
The 3 months correlation between Centrais and Connecticut is -0.06. Overlapping area represents the amount of risk that can be diversified away by holding Centrais Eltricas Brasileiras and The Connecticut Light in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Connecticut Light and Centrais Elétricas 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 Connecticut Light. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Connecticut Light has no effect on the direction of Centrais Elétricas i.e., Centrais Elétricas and Connecticut Light go up and down completely randomly.
Pair Corralation between Centrais Elétricas and Connecticut Light
Assuming the 90 days horizon Centrais Eltricas Brasileiras is expected to under-perform the Connecticut Light. In addition to that, Centrais Elétricas is 1.11 times more volatile than The Connecticut Light. It trades about 0.0 of its total potential returns per unit of risk. The Connecticut Light is currently generating about 0.02 per unit of volatility. If you would invest 3,625 in The Connecticut Light on August 29, 2024 and sell it today you would earn a total of 225.00 from holding The Connecticut Light or generate 6.21% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 66.03% |
| Values | Daily Returns |
Centrais Eltricas Brasileiras vs. The Connecticut Light
Performance |
| Timeline |
| Centrais Elétricas |
| Connecticut Light |
Centrais Elétricas and Connecticut Light Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Centrais Elétricas and Connecticut Light
The main advantage of trading using opposite Centrais Elétricas and Connecticut Light positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Centrais Elétricas position performs unexpectedly, Connecticut Light 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 Connecticut Light will offset losses from the drop in Connecticut Light's long position.| Centrais Elétricas vs. Nextera Energy | Centrais Elétricas vs. Consumers Energy | Centrais Elétricas vs. Duke Energy | Centrais Elétricas vs. Red Electrica Corporacion |
| Connecticut Light vs. Centrais Eltricas Brasileiras | Connecticut Light vs. Centrais Electricas Brasileiras | Connecticut Light vs. Enel Chile SA | Connecticut Light vs. Korea Electric Power |
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 Rebalancing module to analyze risk-adjusted returns against different time horizons to find asset-allocation targets.
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