Correlation Between Centrais Elétricas and Union Electric
Can any of the company-specific risk be diversified away by investing in both Centrais Elétricas and Union Electric 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 Union Electric 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 Union Electric, you can compare the effects of market volatilities on Centrais Elétricas and Union Electric 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 Union Electric. Check out your portfolio center. Please also check ongoing floating volatility patterns of Centrais Elétricas and Union Electric.
Diversification Opportunities for Centrais Elétricas and Union Electric
-0.23 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Centrais and Union is -0.23. Overlapping area represents the amount of risk that can be diversified away by holding Centrais Eltricas Brasileiras and Union Electric in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Union Electric 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 Union Electric. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Union Electric has no effect on the direction of Centrais Elétricas i.e., Centrais Elétricas and Union Electric go up and down completely randomly.
Pair Corralation between Centrais Elétricas and Union Electric
Assuming the 90 days horizon Centrais Eltricas Brasileiras is expected to generate 19.24 times more return on investment than Union Electric. However, Centrais Elétricas is 19.24 times more volatile than Union Electric. It trades about 0.13 of its potential returns per unit of risk. Union Electric is currently generating about 0.25 per unit of risk. If you would invest 628.00 in Centrais Eltricas Brasileiras on October 25, 2024 and sell it today you would earn a total of 27.00 from holding Centrais Eltricas Brasileiras or generate 4.3% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 88.89% |
| Values | Daily Returns |
Centrais Eltricas Brasileiras vs. Union Electric
Performance |
| Timeline |
| Centrais Elétricas |
| Union Electric |
Centrais Elétricas and Union Electric Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Centrais Elétricas and Union Electric
The main advantage of trading using opposite Centrais Elétricas and Union Electric positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Centrais Elétricas position performs unexpectedly, Union Electric 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 Union Electric will offset losses from the drop in Union Electric's long position.| Centrais Elétricas vs. Nextera Energy | Centrais Elétricas vs. Consumers Energy | Centrais Elétricas vs. Duke Energy | Centrais Elétricas vs. Red Electrica Corporacion |
| Union Electric vs. BBB Foods | Union Electric vs. Westrock Coffee | Union Electric vs. Sea | Union Electric vs. Simon Property Group |
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 Insider Screener module to find insiders across different sectors to evaluate their impact on performance.
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