Correlation Between Centrais Electricas and Public Service
Can any of the company-specific risk be diversified away by investing in both Centrais Electricas and Public Service 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 Public Service 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 Public Service Enterprise, you can compare the effects of market volatilities on Centrais Electricas and Public Service 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 Public Service. Check out your portfolio center. Please also check ongoing floating volatility patterns of Centrais Electricas and Public Service.
Diversification Opportunities for Centrais Electricas and Public Service
-0.59 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Centrais and Public is -0.59. Overlapping area represents the amount of risk that can be diversified away by holding Centrais Electricas Brasileira and Public Service Enterprise in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Public Service Enterprise 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 Public Service. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Public Service Enterprise has no effect on the direction of Centrais Electricas i.e., Centrais Electricas and Public Service go up and down completely randomly.
Pair Corralation between Centrais Electricas and Public Service
Considering the 90-day investment horizon Centrais Electricas Brasileiras is expected to under-perform the Public Service. But the stock apears to be less risky and, when comparing its historical volatility, Centrais Electricas Brasileiras is 1.16 times less risky than Public Service. The stock trades about -0.22 of its potential returns per unit of risk. The Public Service Enterprise is currently generating about 0.08 of returns per unit of risk over similar time horizon. If you would invest 9,042 in Public Service Enterprise on August 28, 2024 and sell it today you would earn a total of 260.00 from holding Public Service Enterprise or generate 2.88% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Centrais Electricas Brasileira vs. Public Service Enterprise
Performance |
| Timeline |
| Centrais Electricas |
| Public Service Enterprise |
Centrais Electricas and Public Service Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Centrais Electricas and Public Service
The main advantage of trading using opposite Centrais Electricas and Public Service positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Centrais Electricas position performs unexpectedly, Public Service 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 Public Service will offset losses from the drop in Public Service'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 |
| Public Service vs. CenterPoint Energy | Public Service vs. FirstEnergy | Public Service vs. Pinnacle West Capital | Public Service vs. Edison International |
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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