Correlation Between Engie Brasil and Companhiade Eletricidade
Can any of the company-specific risk be diversified away by investing in both Engie Brasil and Companhiade Eletricidade 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 Companhiade Eletricidade 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 Companhiade Eletricidade do, you can compare the effects of market volatilities on Engie Brasil and Companhiade Eletricidade 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 Companhiade Eletricidade. Check out your portfolio center. Please also check ongoing floating volatility patterns of Engie Brasil and Companhiade Eletricidade.
Diversification Opportunities for Engie Brasil and Companhiade Eletricidade
0.05 | Correlation Coefficient |
Significant diversification
The 3 months correlation between Engie and Companhiade is 0.05. Overlapping area represents the amount of risk that can be diversified away by holding Engie Brasil Energia and Companhiade Eletricidade do in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Companhiade Eletricidade 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 Companhiade Eletricidade. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Companhiade Eletricidade has no effect on the direction of Engie Brasil i.e., Engie Brasil and Companhiade Eletricidade go up and down completely randomly.
Pair Corralation between Engie Brasil and Companhiade Eletricidade
Assuming the 90 days trading horizon Engie Brasil Energia is expected to under-perform the Companhiade Eletricidade. But the stock apears to be less risky and, when comparing its historical volatility, Engie Brasil Energia is 2.23 times less risky than Companhiade Eletricidade. The stock trades about -0.01 of its potential returns per unit of risk. The Companhiade Eletricidade do is currently generating about 0.03 of returns per unit of risk over similar time horizon. If you would invest 3,365 in Companhiade Eletricidade do on August 31, 2024 and sell it today you would earn a total of 435.00 from holding Companhiade Eletricidade do or generate 12.93% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 90.32% |
| Values | Daily Returns |
Engie Brasil Energia vs. Companhiade Eletricidade do
Performance |
| Timeline |
| Engie Brasil Energia |
| Companhiade Eletricidade |
Engie Brasil and Companhiade Eletricidade Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Engie Brasil and Companhiade Eletricidade
The main advantage of trading using opposite Engie Brasil and Companhiade Eletricidade positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Engie Brasil position performs unexpectedly, Companhiade Eletricidade 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 Companhiade Eletricidade will offset losses from the drop in Companhiade Eletricidade'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 |
| Companhiade Eletricidade vs. BB Seguridade Participacoes | Companhiade Eletricidade vs. Engie Brasil Energia | Companhiade Eletricidade vs. CTEEP Companhia | Companhiade Eletricidade vs. Itasa Investimentos |
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 My Watchlist Analysis module to analyze my current watchlist and to refresh optimization strategy. Macroaxis watchlist is based on self-learning algorithm to remember stocks you like.
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