Correlation Between Centrais Elétricas and Genie Energy
Can any of the company-specific risk be diversified away by investing in both Centrais Elétricas and Genie Energy 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 Genie Energy 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 Genie Energy, you can compare the effects of market volatilities on Centrais Elétricas and Genie Energy 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 Genie Energy. Check out your portfolio center. Please also check ongoing floating volatility patterns of Centrais Elétricas and Genie Energy.
Diversification Opportunities for Centrais Elétricas and Genie Energy
0.73 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Centrais and Genie is 0.73. Overlapping area represents the amount of risk that can be diversified away by holding Centrais Eltricas Brasileiras and Genie Energy in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Genie Energy 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 Genie Energy. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Genie Energy has no effect on the direction of Centrais Elétricas i.e., Centrais Elétricas and Genie Energy go up and down completely randomly.
Pair Corralation between Centrais Elétricas and Genie Energy
Assuming the 90 days horizon Centrais Elétricas is expected to generate 3.53 times less return on investment than Genie Energy. But when comparing it to its historical volatility, Centrais Eltricas Brasileiras is 1.04 times less risky than Genie Energy. It trades about 0.01 of its potential returns per unit of risk. Genie Energy is currently generating about 0.03 of returns per unit of risk over similar time horizon. If you would invest 1,101 in Genie Energy on October 25, 2024 and sell it today you would earn a total of 321.00 from holding Genie Energy or generate 29.16% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Centrais Eltricas Brasileiras vs. Genie Energy
Performance |
| Timeline |
| Centrais Elétricas |
| Genie Energy |
Centrais Elétricas and Genie Energy Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Centrais Elétricas and Genie Energy
The main advantage of trading using opposite Centrais Elétricas and Genie Energy positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Centrais Elétricas position performs unexpectedly, Genie Energy 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 Genie Energy will offset losses from the drop in Genie Energy's long position.| Centrais Elétricas vs. Nextera Energy | Centrais Elétricas vs. Consumers Energy | Centrais Elétricas vs. Duke Energy | Centrais Elétricas vs. Red Electrica Corporacion |
| Genie Energy vs. Centrais Electricas Brasileiras | Genie Energy vs. Central Puerto SA | Genie Energy vs. Korea Electric Power | Genie Energy vs. Empresa Distribuidora y |
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 Manager module to state of the art Portfolio Manager to monitor and improve performance of your invested capital.
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