Correlation Between Companhia Paranaense and NRG Energy
Can any of the company-specific risk be diversified away by investing in both Companhia Paranaense and NRG Energy 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 NRG Energy 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 NRG Energy, you can compare the effects of market volatilities on Companhia Paranaense and NRG Energy 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 NRG Energy. Check out your portfolio center. Please also check ongoing floating volatility patterns of Companhia Paranaense and NRG Energy.
Diversification Opportunities for Companhia Paranaense and NRG Energy
-0.69 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Companhia and NRG is -0.69. Overlapping area represents the amount of risk that can be diversified away by holding Companhia Paranaense de and NRG Energy in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on NRG Energy 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 NRG Energy. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of NRG Energy has no effect on the direction of Companhia Paranaense i.e., Companhia Paranaense and NRG Energy go up and down completely randomly.
Pair Corralation between Companhia Paranaense and NRG Energy
Given the investment horizon of 90 days Companhia Paranaense de is expected to under-perform the NRG Energy. In addition to that, Companhia Paranaense is 1.02 times more volatile than NRG Energy. It trades about -0.05 of its total potential returns per unit of risk. NRG Energy is currently generating about 0.1 per unit of volatility. If you would invest 3,828 in NRG Energy on August 24, 2024 and sell it today you would earn a total of 5,861 from holding NRG Energy or generate 153.11% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 46.06% |
| Values | Daily Returns |
Companhia Paranaense de vs. NRG Energy
Performance |
| Timeline |
| Companhia Paranaense |
| NRG Energy |
Companhia Paranaense and NRG Energy Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Companhia Paranaense and NRG Energy
The main advantage of trading using opposite Companhia Paranaense and NRG Energy positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Companhia Paranaense position performs unexpectedly, NRG Energy 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 NRG Energy will offset losses from the drop in NRG Energy's long position.| Companhia Paranaense vs. LGI Homes | Companhia Paranaense vs. Merit Medical Systems | Companhia Paranaense vs. Viemed Healthcare | Companhia Paranaense vs. HNI Corp |
| NRG Energy vs. TransAlta Corp | NRG Energy vs. Kenon Holdings | NRG Energy vs. Pampa Energia SA | NRG Energy vs. AGL 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 Money Managers module to screen money managers from public funds and ETFs managed around the world.
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