Correlation Between Engie Brasil and Banco Da
Can any of the company-specific risk be diversified away by investing in both Engie Brasil and Banco Da 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 Engie Brasil and Banco Da into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Engie Brasil Energia and Banco da Amaznia, you can compare the effects of market volatilities on Engie Brasil and Banco Da 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 Engie Brasil with a short position of Banco Da. Check out your portfolio center. Please also check ongoing floating volatility patterns of Engie Brasil and Banco Da.
Diversification Opportunities for Engie Brasil and Banco Da
0.89 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Engie and Banco is 0.89. Overlapping area represents the amount of risk that can be diversified away by holding Engie Brasil Energia and Banco da Amaznia in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Banco da Amaznia and Engie Brasil 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 Engie Brasil Energia are associated (or correlated) with Banco Da. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Banco da Amaznia has no effect on the direction of Engie Brasil i.e., Engie Brasil and Banco Da go up and down completely randomly.
Pair Corralation between Engie Brasil and Banco Da
Assuming the 90 days trading horizon Engie Brasil Energia is expected to under-perform the Banco Da. In addition to that, Engie Brasil is 1.48 times more volatile than Banco da Amaznia. It trades about -0.41 of its total potential returns per unit of risk. Banco da Amaznia is currently generating about -0.46 per unit of volatility. If you would invest 9,145 in Banco da Amaznia on September 4, 2024 and sell it today you would lose (732.00) from holding Banco da Amaznia or give up 8.0% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Engie Brasil Energia vs. Banco da Amaznia
Performance |
| Timeline |
| Engie Brasil Energia |
| Banco da Amaznia |
Engie Brasil and Banco Da Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Engie Brasil and Banco Da
The main advantage of trading using opposite Engie Brasil and Banco Da positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Engie Brasil position performs unexpectedly, Banco Da 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 Banco Da will offset losses from the drop in Banco Da's long position.| Engie Brasil vs. WEG SA | Engie Brasil vs. Transmissora Aliana de | Engie Brasil vs. Fleury SA | Engie Brasil vs. BB Seguridade Participacoes |
| Banco Da vs. WEG SA | Banco Da vs. Engie Brasil Energia | Banco Da vs. Vale SA | Banco Da vs. Magazine Luiza SA |
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 Bonds Directory module to find actively traded corporate debentures issued by US companies.
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