Correlation Between Engie Brasil and Nextera Energy
Can any of the company-specific risk be diversified away by investing in both Engie Brasil and Nextera 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 Nextera 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 Nextera Energy, you can compare the effects of market volatilities on Engie Brasil and Nextera 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 Nextera Energy. Check out your portfolio center. Please also check ongoing floating volatility patterns of Engie Brasil and Nextera Energy.
Diversification Opportunities for Engie Brasil and Nextera Energy
0.47 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Engie and Nextera is 0.47. Overlapping area represents the amount of risk that can be diversified away by holding Engie Brasil Energia and Nextera Energy in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Nextera 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 Nextera Energy. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Nextera Energy has no effect on the direction of Engie Brasil i.e., Engie Brasil and Nextera Energy go up and down completely randomly.
Pair Corralation between Engie Brasil and Nextera Energy
Assuming the 90 days horizon Engie Brasil Energia is expected to under-perform the Nextera Energy. But the pink sheet apears to be less risky and, when comparing its historical volatility, Engie Brasil Energia is 1.09 times less risky than Nextera Energy. The pink sheet trades about -0.12 of its potential returns per unit of risk. The Nextera Energy is currently generating about -0.07 of returns per unit of risk over similar time horizon. If you would invest 4,628 in Nextera Energy on August 28, 2024 and sell it today you would lose (240.00) from holding Nextera Energy or give up 5.19% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Engie Brasil Energia vs. Nextera Energy
Performance |
| Timeline |
| Engie Brasil Energia |
| Nextera Energy |
Engie Brasil and Nextera Energy Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Engie Brasil and Nextera Energy
The main advantage of trading using opposite Engie Brasil and Nextera Energy positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Engie Brasil position performs unexpectedly, Nextera 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 Nextera Energy will offset losses from the drop in Nextera Energy's long position.| Engie Brasil vs. NVIDIA | Engie Brasil vs. Blacksky Technology | Engie Brasil vs. Crowdstrike Holdings | Engie Brasil vs. Cintas |
| Nextera Energy vs. Sensient Technologies | Nextera Energy vs. Axalta Coating Systems | Nextera Energy vs. Balchem | Nextera Energy vs. Boston Omaha Corp |
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 Financial Widgets module to easily integrated Macroaxis content with over 30 different plug-and-play financial widgets.
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