Correlation Between Companhia Paranaense and Canadian Utilities
Can any of the company-specific risk be diversified away by investing in both Companhia Paranaense and Canadian Utilities 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 Companhia Paranaense and Canadian Utilities into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Companhia Paranaense de and Canadian Utilities Limited, you can compare the effects of market volatilities on Companhia Paranaense and Canadian Utilities 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 Companhia Paranaense with a short position of Canadian Utilities. Check out your portfolio center. Please also check ongoing floating volatility patterns of Companhia Paranaense and Canadian Utilities.
Diversification Opportunities for Companhia Paranaense and Canadian Utilities
0.09 | Correlation Coefficient |
Significant diversification
The 3 months correlation between Companhia and Canadian is 0.09. Overlapping area represents the amount of risk that can be diversified away by holding Companhia Paranaense de and Canadian Utilities Limited in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Canadian Utilities and Companhia Paranaense 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 Companhia Paranaense de are associated (or correlated) with Canadian Utilities. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Canadian Utilities has no effect on the direction of Companhia Paranaense i.e., Companhia Paranaense and Canadian Utilities go up and down completely randomly.
Pair Corralation between Companhia Paranaense and Canadian Utilities
Considering the 90-day investment horizon Companhia Paranaense de is expected to under-perform the Canadian Utilities. In addition to that, Companhia Paranaense is 1.61 times more volatile than Canadian Utilities Limited. It trades about -0.19 of its total potential returns per unit of risk. Canadian Utilities Limited is currently generating about -0.07 per unit of volatility. If you would invest 2,589 in Canadian Utilities Limited on August 24, 2024 and sell it today you would lose (43.00) from holding Canadian Utilities Limited or give up 1.66% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Companhia Paranaense de vs. Canadian Utilities Limited
Performance |
| Timeline |
| Companhia Paranaense |
| Canadian Utilities |
Companhia Paranaense and Canadian Utilities Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Companhia Paranaense and Canadian Utilities
The main advantage of trading using opposite Companhia Paranaense and Canadian Utilities positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Companhia Paranaense position performs unexpectedly, Canadian Utilities 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 Canadian Utilities will offset losses from the drop in Canadian Utilities' long position.| Companhia Paranaense vs. Montauk Renewables | Companhia Paranaense vs. Energy of Minas | Companhia Paranaense vs. NorthWestern | Companhia Paranaense vs. Otter Tail |
| Canadian Utilities vs. TransAlta Corp | Canadian Utilities vs. Pampa Energia SA | Canadian Utilities vs. Vistra Energy Corp | Canadian Utilities vs. NRG Energy |
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 Idea Analyzer module to analyze all characteristics, volatility and risk-adjusted return of Macroaxis ideas.
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