Correlation Between Companhia Paranaense and UNITIL
Can any of the company-specific risk be diversified away by investing in both Companhia Paranaense and UNITIL 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 UNITIL 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 UNITIL, you can compare the effects of market volatilities on Companhia Paranaense and UNITIL 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 UNITIL. Check out your portfolio center. Please also check ongoing floating volatility patterns of Companhia Paranaense and UNITIL.
Diversification Opportunities for Companhia Paranaense and UNITIL
0.36 | Correlation Coefficient |
Weak diversification
The 3 months correlation between Companhia and UNITIL is 0.36. Overlapping area represents the amount of risk that can be diversified away by holding Companhia Paranaense de and UNITIL in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on UNITIL 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 UNITIL. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of UNITIL has no effect on the direction of Companhia Paranaense i.e., Companhia Paranaense and UNITIL go up and down completely randomly.
Pair Corralation between Companhia Paranaense and UNITIL
Considering the 90-day investment horizon Companhia Paranaense de is expected to under-perform the UNITIL. But the stock apears to be less risky and, when comparing its historical volatility, Companhia Paranaense de is 1.49 times less risky than UNITIL. The stock trades about -0.18 of its potential returns per unit of risk. The UNITIL is currently generating about 0.07 of returns per unit of risk over similar time horizon. If you would invest 5,867 in UNITIL on August 24, 2024 and sell it today you would earn a total of 172.00 from holding UNITIL or generate 2.93% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Companhia Paranaense de vs. UNITIL
Performance |
| Timeline |
| Companhia Paranaense |
| UNITIL |
Companhia Paranaense and UNITIL Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Companhia Paranaense and UNITIL
The main advantage of trading using opposite Companhia Paranaense and UNITIL positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Companhia Paranaense position performs unexpectedly, UNITIL 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 UNITIL will offset losses from the drop in UNITIL's long position.| Companhia Paranaense vs. Montauk Renewables | Companhia Paranaense vs. Energy of Minas | Companhia Paranaense vs. NorthWestern | Companhia Paranaense vs. Otter Tail |
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 Portfolio Diagnostics module to use generated alerts and portfolio events aggregator to diagnose current holdings.
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