Correlation Between Engie Brasil and Gafisa SA
Can any of the company-specific risk be diversified away by investing in both Engie Brasil and Gafisa SA 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 Gafisa SA 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 Gafisa SA, you can compare the effects of market volatilities on Engie Brasil and Gafisa SA 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 Gafisa SA. Check out your portfolio center. Please also check ongoing floating volatility patterns of Engie Brasil and Gafisa SA.
Diversification Opportunities for Engie Brasil and Gafisa SA
0.92 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between Engie and Gafisa is 0.92. Overlapping area represents the amount of risk that can be diversified away by holding Engie Brasil Energia and Gafisa SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Gafisa 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 Gafisa SA. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Gafisa SA has no effect on the direction of Engie Brasil i.e., Engie Brasil and Gafisa SA go up and down completely randomly.
Pair Corralation between Engie Brasil and Gafisa SA
Assuming the 90 days trading horizon Engie Brasil Energia is expected to generate 0.19 times more return on investment than Gafisa SA. However, Engie Brasil Energia is 5.21 times less risky than Gafisa SA. It trades about -0.02 of its potential returns per unit of risk. Gafisa SA is currently generating about -0.06 per unit of risk. If you would invest 4,093 in Engie Brasil Energia on September 2, 2024 and sell it today you would lose (293.00) from holding Engie Brasil Energia or give up 7.16% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 99.2% |
| Values | Daily Returns |
Engie Brasil Energia vs. Gafisa SA
Performance |
| Timeline |
| Engie Brasil Energia |
| Gafisa SA |
Engie Brasil and Gafisa SA Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Engie Brasil and Gafisa SA
The main advantage of trading using opposite Engie Brasil and Gafisa SA positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Engie Brasil position performs unexpectedly, Gafisa SA 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 Gafisa SA will offset losses from the drop in Gafisa SA'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 |
| Gafisa SA vs. Engie Brasil Energia | Gafisa SA vs. Energisa SA | Gafisa SA vs. Clave Indices De | Gafisa SA vs. BTG Pactual Logstica |
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 Price Ceiling Movement module to calculate and plot Price Ceiling Movement for different equity instruments.
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