Correlation Between Centrais Eltricas and Schlumberger
Can any of the company-specific risk be diversified away by investing in both Centrais Eltricas and Schlumberger 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 Schlumberger 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 Schlumberger Limited, you can compare the effects of market volatilities on Centrais Eltricas and Schlumberger 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 Schlumberger. Check out your portfolio center. Please also check ongoing floating volatility patterns of Centrais Eltricas and Schlumberger.
Diversification Opportunities for Centrais Eltricas and Schlumberger
-0.74 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between Centrais and Schlumberger is -0.74. Overlapping area represents the amount of risk that can be diversified away by holding Centrais Eltricas Brasileiras and Schlumberger Limited in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Schlumberger Limited 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 Schlumberger. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Schlumberger Limited has no effect on the direction of Centrais Eltricas i.e., Centrais Eltricas and Schlumberger go up and down completely randomly.
Pair Corralation between Centrais Eltricas and Schlumberger
Assuming the 90 days trading horizon Centrais Eltricas Brasileiras is expected to under-perform the Schlumberger. But the preferred stock apears to be less risky and, when comparing its historical volatility, Centrais Eltricas Brasileiras is 1.43 times less risky than Schlumberger. The preferred stock trades about -0.23 of its potential returns per unit of risk. The Schlumberger Limited is currently generating about 0.22 of returns per unit of risk over similar time horizon. If you would invest 11,854 in Schlumberger Limited on September 1, 2024 and sell it today you would earn a total of 1,263 from holding Schlumberger Limited or generate 10.65% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 95.24% |
| Values | Daily Returns |
Centrais Eltricas Brasileiras vs. Schlumberger Limited
Performance |
| Timeline |
| Centrais Eltricas |
| Schlumberger Limited |
Centrais Eltricas and Schlumberger Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Centrais Eltricas and Schlumberger
The main advantage of trading using opposite Centrais Eltricas and Schlumberger positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Centrais Eltricas position performs unexpectedly, Schlumberger 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 Schlumberger will offset losses from the drop in Schlumberger'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 |
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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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