Correlation Between Centrais Electricas and Innergex Renewable
Can any of the company-specific risk be diversified away by investing in both Centrais Electricas and Innergex Renewable 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 Innergex Renewable 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 Innergex Renewable Energy, you can compare the effects of market volatilities on Centrais Electricas and Innergex Renewable 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 Innergex Renewable. Check out your portfolio center. Please also check ongoing floating volatility patterns of Centrais Electricas and Innergex Renewable.
Diversification Opportunities for Centrais Electricas and Innergex Renewable
0.6 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Centrais and Innergex is 0.6. Overlapping area represents the amount of risk that can be diversified away by holding Centrais Electricas Brasileira and Innergex Renewable Energy in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Innergex Renewable Energy 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 Innergex Renewable. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Innergex Renewable Energy has no effect on the direction of Centrais Electricas i.e., Centrais Electricas and Innergex Renewable go up and down completely randomly.
Pair Corralation between Centrais Electricas and Innergex Renewable
Considering the 90-day investment horizon Centrais Electricas Brasileiras is expected to under-perform the Innergex Renewable. But the stock apears to be less risky and, when comparing its historical volatility, Centrais Electricas Brasileiras is 1.13 times less risky than Innergex Renewable. The stock trades about -0.22 of its potential returns per unit of risk. The Innergex Renewable Energy is currently generating about -0.06 of returns per unit of risk over similar time horizon. If you would invest 640.00 in Innergex Renewable Energy on September 2, 2024 and sell it today you would lose (21.00) from holding Innergex Renewable Energy or give up 3.28% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Centrais Electricas Brasileira vs. Innergex Renewable Energy
Performance |
| Timeline |
| Centrais Electricas |
| Innergex Renewable Energy |
Centrais Electricas and Innergex Renewable Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Centrais Electricas and Innergex Renewable
The main advantage of trading using opposite Centrais Electricas and Innergex Renewable positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Centrais Electricas position performs unexpectedly, Innergex Renewable 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 Innergex Renewable will offset losses from the drop in Innergex Renewable's long position.| Centrais Electricas vs. Genie Energy | Centrais Electricas vs. Central Puerto SA | Centrais Electricas vs. Korea Electric Power | Centrais Electricas vs. Empresa Distribuidora y |
| Innergex Renewable vs. Orsted AS | Innergex Renewable vs. Clearway Energy | Innergex Renewable vs. Fusion Fuel Green | Innergex Renewable vs. Powertap Hydrogen 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 Money Managers module to screen money managers from public funds and ETFs managed around the world.
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