Correlation Between Engie Brasil and Equatorial Energia
Can any of the company-specific risk be diversified away by investing in both Engie Brasil and Equatorial 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 Equatorial 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 Equatorial Energia SA, you can compare the effects of market volatilities on Engie Brasil and Equatorial 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 Equatorial Energia. Check out your portfolio center. Please also check ongoing floating volatility patterns of Engie Brasil and Equatorial Energia.
Diversification Opportunities for Engie Brasil and Equatorial Energia
0.87 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Engie and Equatorial is 0.87. Overlapping area represents the amount of risk that can be diversified away by holding Engie Brasil Energia and Equatorial Energia SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Equatorial Energia 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 Energia. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Equatorial Energia has no effect on the direction of Engie Brasil i.e., Engie Brasil and Equatorial Energia go up and down completely randomly.
Pair Corralation between Engie Brasil and Equatorial Energia
Assuming the 90 days trading horizon Engie Brasil is expected to generate 2.2 times less return on investment than Equatorial Energia. But when comparing it to its historical volatility, Engie Brasil Energia is 1.35 times less risky than Equatorial Energia. It trades about 0.03 of its potential returns per unit of risk. Equatorial Energia SA is currently generating about 0.04 of returns per unit of risk over similar time horizon. If you would invest 2,615 in Equatorial Energia SA on August 24, 2024 and sell it today you would earn a total of 659.00 from holding Equatorial Energia SA or generate 25.2% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 98.56% |
| Values | Daily Returns |
Engie Brasil Energia vs. Equatorial Energia SA
Performance |
| Timeline |
| Engie Brasil Energia |
| Equatorial Energia |
Engie Brasil and Equatorial Energia Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Engie Brasil and Equatorial Energia
The main advantage of trading using opposite Engie Brasil and Equatorial Energia positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Engie Brasil position performs unexpectedly, Equatorial 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 Equatorial Energia will offset losses from the drop in Equatorial 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 |
| Equatorial Energia vs. Localiza Rent a | Equatorial Energia vs. Raia Drogasil SA | Equatorial Energia vs. Engie Brasil Energia | Equatorial Energia vs. Lojas Renner 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 Piotroski F Score module to get Piotroski F Score based on the binary analysis strategy of nine different fundamentals.
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