Correlation Between Centrais Electricas and Arbitrum
Can any of the company-specific risk be diversified away by investing in both Centrais Electricas and Arbitrum 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 Electricas and Arbitrum into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Centrais Electricas Brasileiras and Arbitrum, you can compare the effects of market volatilities on Centrais Electricas and Arbitrum 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 Electricas with a short position of Arbitrum. Check out your portfolio center. Please also check ongoing floating volatility patterns of Centrais Electricas and Arbitrum.
Diversification Opportunities for Centrais Electricas and Arbitrum
-0.79 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between Centrais and Arbitrum is -0.79. Overlapping area represents the amount of risk that can be diversified away by holding Centrais Electricas Brasileira and Arbitrum in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Arbitrum and Centrais Electricas 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 Electricas Brasileiras are associated (or correlated) with Arbitrum. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Arbitrum has no effect on the direction of Centrais Electricas i.e., Centrais Electricas and Arbitrum go up and down completely randomly.
Pair Corralation between Centrais Electricas and Arbitrum
Considering the 90-day investment horizon Centrais Electricas Brasileiras is expected to generate 0.32 times more return on investment than Arbitrum. However, Centrais Electricas Brasileiras is 3.17 times less risky than Arbitrum. It trades about 0.25 of its potential returns per unit of risk. Arbitrum is currently generating about -0.04 per unit of risk. If you would invest 618.00 in Centrais Electricas Brasileiras on December 8, 2024 and sell it today you would earn a total of 54.00 from holding Centrais Electricas Brasileiras or generate 8.74% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Centrais Electricas Brasileira vs. Arbitrum
Performance |
| Timeline |
| Centrais Electricas |
| Arbitrum |
Centrais Electricas and Arbitrum Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Centrais Electricas and Arbitrum
The main advantage of trading using opposite Centrais Electricas and Arbitrum positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Centrais Electricas position performs unexpectedly, Arbitrum 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 Arbitrum will offset losses from the drop in Arbitrum's long position.| Centrais Electricas vs. Genie Energy | ||
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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 Volatility module to check portfolio volatility and analyze historical return density to properly model market risk.
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