Correlation Between Engie Brasil and CPFL Energia
Can any of the company-specific risk be diversified away by investing in both Engie Brasil and CPFL Energia 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 CPFL Energia 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 CPFL Energia SA, you can compare the effects of market volatilities on Engie Brasil and CPFL Energia 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 CPFL Energia. Check out your portfolio center. Please also check ongoing floating volatility patterns of Engie Brasil and CPFL Energia.
Diversification Opportunities for Engie Brasil and CPFL Energia
0.72 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Engie and CPFL is 0.72. Overlapping area represents the amount of risk that can be diversified away by holding Engie Brasil Energia and CPFL Energia SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on CPFL Energia SA 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 CPFL Energia. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of CPFL Energia SA has no effect on the direction of Engie Brasil i.e., Engie Brasil and CPFL Energia go up and down completely randomly.
Pair Corralation between Engie Brasil and CPFL Energia
Assuming the 90 days trading horizon Engie Brasil Energia is expected to under-perform the CPFL Energia. But the stock apears to be less risky and, when comparing its historical volatility, Engie Brasil Energia is 1.05 times less risky than CPFL Energia. The stock trades about -0.1 of its potential returns per unit of risk. The CPFL Energia SA is currently generating about -0.02 of returns per unit of risk over similar time horizon. If you would invest 3,440 in CPFL Energia SA on August 30, 2024 and sell it today you would lose (113.00) from holding CPFL Energia SA 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 |
Engie Brasil Energia vs. CPFL Energia SA
Performance |
| Timeline |
| Engie Brasil Energia |
| CPFL Energia SA |
Engie Brasil and CPFL Energia Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Engie Brasil and CPFL Energia
The main advantage of trading using opposite Engie Brasil and CPFL Energia positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Engie Brasil position performs unexpectedly, CPFL Energia 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 CPFL Energia will offset losses from the drop in CPFL Energia'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 |
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 Stock Tickers module to use high-impact, comprehensive, and customizable stock tickers that can be easily integrated to any websites.
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