Correlation Between Centrais Eltricas and Equatorial Energia
Can any of the company-specific risk be diversified away by investing in both Centrais Eltricas 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 Centrais Eltricas and Equatorial Energia into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Centrais Eltricas Brasileiras and Equatorial Energia SA, you can compare the effects of market volatilities on Centrais Eltricas 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 Centrais Eltricas with a short position of Equatorial Energia. Check out your portfolio center. Please also check ongoing floating volatility patterns of Centrais Eltricas and Equatorial Energia.
Diversification Opportunities for Centrais Eltricas and Equatorial Energia
0.87 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Centrais and Equatorial is 0.87. Overlapping area represents the amount of risk that can be diversified away by holding Centrais Eltricas Brasileiras and Equatorial Energia SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Equatorial Energia and Centrais Eltricas 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 Centrais Eltricas Brasileiras 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 Centrais Eltricas i.e., Centrais Eltricas and Equatorial Energia go up and down completely randomly.
Pair Corralation between Centrais Eltricas and Equatorial Energia
Assuming the 90 days trading horizon Centrais Eltricas Brasileiras is expected to under-perform the Equatorial Energia. But the preferred stock apears to be less risky and, when comparing its historical volatility, Centrais Eltricas Brasileiras is 1.21 times less risky than Equatorial Energia. The preferred stock trades about -0.23 of its potential returns per unit of risk. The Equatorial Energia SA is currently generating about 0.06 of returns per unit of risk over similar time horizon. If you would invest 3,196 in Equatorial Energia SA on August 24, 2024 and sell it today you would earn a total of 54.00 from holding Equatorial Energia SA or generate 1.69% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Centrais Eltricas Brasileiras vs. Equatorial Energia SA
Performance |
| Timeline |
| Centrais Eltricas |
| Equatorial Energia |
Centrais Eltricas and Equatorial Energia Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Centrais Eltricas and Equatorial Energia
The main advantage of trading using opposite Centrais Eltricas and Equatorial Energia positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Centrais Eltricas 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.| Centrais Eltricas vs. Centrais Eltricas Brasileiras | Centrais Eltricas vs. Companhia Energtica de | Centrais Eltricas vs. Companhia Paranaense de | Centrais Eltricas vs. Companhia de Saneamento |
| 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 Headlines Timeline module to stay connected to all market stories and filter out noise. Drill down to analyze hype elasticity.
Other Complementary Tools
| Portfolio Dashboard Portfolio dashboard that provides centralized access to all your investments | |
| Fundamentals Comparison Compare fundamentals across multiple equities to find investing opportunities | |
| Sign In To Macroaxis Sign in to explore Macroaxis' wealth optimization platform and fintech modules | |
| Premium Stories Follow Macroaxis premium stories from verified contributors across different equity types, categories and coverage scope | |
| Competition Analyzer Analyze and compare many basic indicators for a group of related or unrelated entities |