Correlation Between EDP - and Green Planet
Can any of the company-specific risk be diversified away by investing in both EDP - and Green Planet 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 EDP - and Green Planet into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between EDP Energias and Green Planet Bio, you can compare the effects of market volatilities on EDP - and Green Planet 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 EDP - with a short position of Green Planet. Check out your portfolio center. Please also check ongoing floating volatility patterns of EDP - and Green Planet.
Diversification Opportunities for EDP - and Green Planet
-0.37 | Correlation Coefficient |
Very good diversification
The 3 months correlation between EDP and Green is -0.37. Overlapping area represents the amount of risk that can be diversified away by holding EDP Energias and Green Planet Bio in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Green Planet Bio and EDP - 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 EDP Energias are associated (or correlated) with Green Planet. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Green Planet Bio has no effect on the direction of EDP - i.e., EDP - and Green Planet go up and down completely randomly.
Pair Corralation between EDP - and Green Planet
Assuming the 90 days horizon EDP Energias is expected to generate 0.17 times more return on investment than Green Planet. However, EDP Energias is 6.03 times less risky than Green Planet. It trades about 0.11 of its potential returns per unit of risk. Green Planet Bio is currently generating about -0.21 per unit of risk. If you would invest 328.00 in EDP Energias on January 8, 2025 and sell it today you would earn a total of 21.00 from holding EDP Energias or generate 6.4% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
EDP Energias vs. Green Planet Bio
Performance |
| Timeline |
| EDP Energias |
| Green Planet Bio |
EDP - and Green Planet Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with EDP - and Green Planet
The main advantage of trading using opposite EDP - and Green Planet positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if EDP - position performs unexpectedly, Green Planet 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 Green Planet will offset losses from the drop in Green Planet's long position.The idea behind EDP Energias and Green Planet Bio pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.| Green Planet vs. EDP Energias de | Green Planet vs. Endesa SA ADR | Green Planet vs. Enel SpA | Green Planet vs. Aquagold International |
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 Instant Ratings module to determine any equity ratings based on digital recommendations. Macroaxis instant equity ratings are based on combination of fundamental analysis and risk-adjusted market performance.
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