Correlation Between Engie Brasil and Dominion Energy
Can any of the company-specific risk be diversified away by investing in both Engie Brasil and Dominion Energy 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 Dominion Energy 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 Dominion Energy, you can compare the effects of market volatilities on Engie Brasil and Dominion Energy 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 Dominion Energy. Check out your portfolio center. Please also check ongoing floating volatility patterns of Engie Brasil and Dominion Energy.
Diversification Opportunities for Engie Brasil and Dominion Energy
-0.66 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Engie and Dominion is -0.66. Overlapping area represents the amount of risk that can be diversified away by holding Engie Brasil Energia and Dominion Energy in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Dominion Energy 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 Dominion Energy. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Dominion Energy has no effect on the direction of Engie Brasil i.e., Engie Brasil and Dominion Energy go up and down completely randomly.
Pair Corralation between Engie Brasil and Dominion Energy
Assuming the 90 days trading horizon Engie Brasil Energia is expected to under-perform the Dominion Energy. But the stock apears to be less risky and, when comparing its historical volatility, Engie Brasil Energia is 2.01 times less risky than Dominion Energy. The stock trades about -0.01 of its potential returns per unit of risk. The Dominion Energy is currently generating about 0.06 of returns per unit of risk over similar time horizon. If you would invest 13,100 in Dominion Energy on August 31, 2024 and sell it today you would earn a total of 3,900 from holding Dominion Energy or generate 29.77% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 67.47% |
| Values | Daily Returns |
Engie Brasil Energia vs. Dominion Energy
Performance |
| Timeline |
| Engie Brasil Energia |
| Dominion Energy |
Engie Brasil and Dominion Energy Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Engie Brasil and Dominion Energy
The main advantage of trading using opposite Engie Brasil and Dominion Energy positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Engie Brasil position performs unexpectedly, Dominion Energy 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 Dominion Energy will offset losses from the drop in Dominion Energy'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 |
| Dominion Energy vs. Centrais Eltricas Brasileiras | Dominion Energy vs. Transmissora Aliana de | Dominion Energy vs. CPFL Energia SA | Dominion Energy vs. Engie Brasil Energia |
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 Portfolio Rebalancing module to analyze risk-adjusted returns against different time horizons to find asset-allocation targets.
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