Correlation Between Centrais Elétricas and Engie Brasil
Can any of the company-specific risk be diversified away by investing in both Centrais Elétricas and Engie Brasil 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 Engie Brasil 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 Engie Brasil Energia, you can compare the effects of market volatilities on Centrais Elétricas and Engie Brasil 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 Engie Brasil. Check out your portfolio center. Please also check ongoing floating volatility patterns of Centrais Elétricas and Engie Brasil.
Diversification Opportunities for Centrais Elétricas and Engie Brasil
0.91 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between Centrais and Engie is 0.91. Overlapping area represents the amount of risk that can be diversified away by holding Centrais Eltricas Brasileiras and Engie Brasil Energia in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Engie Brasil Energia 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 Engie Brasil. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Engie Brasil Energia has no effect on the direction of Centrais Elétricas i.e., Centrais Elétricas and Engie Brasil go up and down completely randomly.
Pair Corralation between Centrais Elétricas and Engie Brasil
Assuming the 90 days horizon Centrais Elétricas is expected to generate 1.23 times less return on investment than Engie Brasil. But when comparing it to its historical volatility, Centrais Eltricas Brasileiras is 1.05 times less risky than Engie Brasil. It trades about 0.13 of its potential returns per unit of risk. Engie Brasil Energia is currently generating about 0.15 of returns per unit of risk over similar time horizon. If you would invest 580.00 in Engie Brasil Energia on October 25, 2024 and sell it today you would earn a total of 31.00 from holding Engie Brasil Energia or generate 5.34% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Centrais Eltricas Brasileiras vs. Engie Brasil Energia
Performance |
| Timeline |
| Centrais Elétricas |
| Engie Brasil Energia |
Centrais Elétricas and Engie Brasil Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Centrais Elétricas and Engie Brasil
The main advantage of trading using opposite Centrais Elétricas and Engie Brasil positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Centrais Elétricas position performs unexpectedly, Engie Brasil 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 Engie Brasil will offset losses from the drop in Engie Brasil's long position.| Centrais Elétricas vs. Nextera Energy | Centrais Elétricas vs. Consumers Energy | Centrais Elétricas vs. Duke Energy | Centrais Elétricas vs. Red Electrica Corporacion |
| Engie Brasil vs. Red Electrica Corporacion | Engie Brasil vs. Centrais Eltricas Brasileiras | Engie Brasil vs. Centrais Electricas Brasileiras | Engie Brasil vs. Enel Chile SA |
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 Commodity Channel module to use Commodity Channel Index to analyze current equity momentum.
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