Correlation Between Centrais Elétricas and OGE Energy
Can any of the company-specific risk be diversified away by investing in both Centrais Elétricas and OGE 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 OGE 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 OGE Energy, you can compare the effects of market volatilities on Centrais Elétricas and OGE 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 OGE Energy. Check out your portfolio center. Please also check ongoing floating volatility patterns of Centrais Elétricas and OGE Energy.
Diversification Opportunities for Centrais Elétricas and OGE Energy
-0.75 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between Centrais and OGE is -0.75. Overlapping area represents the amount of risk that can be diversified away by holding Centrais Eltricas Brasileiras and OGE Energy in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on OGE 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 OGE Energy. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of OGE Energy has no effect on the direction of Centrais Elétricas i.e., Centrais Elétricas and OGE Energy go up and down completely randomly.
Pair Corralation between Centrais Elétricas and OGE Energy
Assuming the 90 days horizon Centrais Eltricas Brasileiras is expected to under-perform the OGE Energy. In addition to that, Centrais Elétricas is 1.06 times more volatile than OGE Energy. It trades about -0.2 of its total potential returns per unit of risk. OGE Energy is currently generating about 0.2 per unit of volatility. If you would invest 4,102 in OGE Energy on August 24, 2024 and sell it today you would earn a total of 279.00 from holding OGE Energy or generate 6.8% 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. OGE Energy
Performance |
| Timeline |
| Centrais Elétricas |
| OGE Energy |
Centrais Elétricas and OGE Energy Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Centrais Elétricas and OGE Energy
The main advantage of trading using opposite Centrais Elétricas and OGE Energy positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Centrais Elétricas position performs unexpectedly, OGE 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 OGE Energy will offset losses from the drop in OGE 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 |
| OGE Energy vs. Alliant Energy Corp | OGE Energy vs. CMS Energy | OGE Energy vs. CenterPoint Energy | OGE Energy vs. Pinnacle West Capital |
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 Analyzer module to portfolio analysis module that provides access to portfolio diagnostics and optimization engine.
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