Correlation Between Engie Brasil and Equatorial Par
Can any of the company-specific risk be diversified away by investing in both Engie Brasil and Equatorial Par 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 Equatorial Par 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 Equatorial Par Distribuidora, you can compare the effects of market volatilities on Engie Brasil and Equatorial Par 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 Equatorial Par. Check out your portfolio center. Please also check ongoing floating volatility patterns of Engie Brasil and Equatorial Par.
Diversification Opportunities for Engie Brasil and Equatorial Par
0.83 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Engie and Equatorial is 0.83. Overlapping area represents the amount of risk that can be diversified away by holding Engie Brasil Energia and Equatorial Par Distribuidora in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Equatorial Par Distr 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 Equatorial Par. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Equatorial Par Distr has no effect on the direction of Engie Brasil i.e., Engie Brasil and Equatorial Par go up and down completely randomly.
Pair Corralation between Engie Brasil and Equatorial Par
Assuming the 90 days trading horizon Engie Brasil Energia is expected to generate 0.56 times more return on investment than Equatorial Par. However, Engie Brasil Energia is 1.78 times less risky than Equatorial Par. It trades about 0.03 of its potential returns per unit of risk. Equatorial Par Distribuidora is currently generating about 0.0 per unit of risk. If you would invest 3,357 in Engie Brasil Energia on September 2, 2024 and sell it today you would earn a total of 443.00 from holding Engie Brasil Energia or generate 13.2% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 98.8% |
| Values | Daily Returns |
Engie Brasil Energia vs. Equatorial Par Distribuidora
Performance |
| Timeline |
| Engie Brasil Energia |
| Equatorial Par Distr |
Engie Brasil and Equatorial Par Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Engie Brasil and Equatorial Par
The main advantage of trading using opposite Engie Brasil and Equatorial Par positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Engie Brasil position performs unexpectedly, Equatorial Par 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 Equatorial Par will offset losses from the drop in Equatorial Par'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 |
| Equatorial Par vs. Rede Energia Participaes | Equatorial Par vs. Atom Empreendimentos e | Equatorial Par vs. Renova Energia SA | Equatorial Par vs. Unicasa Indstria de |
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 Suggestion module to get suggestions outside of your existing asset allocation including your own model portfolios.
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