Correlation Between Companhia Paranaense and Talen Energy
Can any of the company-specific risk be diversified away by investing in both Companhia Paranaense and Talen 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 Talen 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 Talen Energy, you can compare the effects of market volatilities on Companhia Paranaense and Talen 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 Talen Energy. Check out your portfolio center. Please also check ongoing floating volatility patterns of Companhia Paranaense and Talen Energy.
Diversification Opportunities for Companhia Paranaense and Talen Energy
-0.75 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between Companhia and Talen is -0.75. Overlapping area represents the amount of risk that can be diversified away by holding Companhia Paranaense de and Talen Energy in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Talen 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 Talen Energy. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Talen Energy has no effect on the direction of Companhia Paranaense i.e., Companhia Paranaense and Talen Energy go up and down completely randomly.
Pair Corralation between Companhia Paranaense and Talen Energy
Given the investment horizon of 90 days Companhia Paranaense de is expected to under-perform the Talen Energy. But the stock apears to be less risky and, when comparing its historical volatility, Companhia Paranaense de is 2.11 times less risky than Talen Energy. The stock trades about -0.08 of its potential returns per unit of risk. The Talen Energy is currently generating about 0.23 of returns per unit of risk over similar time horizon. If you would invest 18,307 in Talen Energy on August 24, 2024 and sell it today you would earn a total of 3,682 from holding Talen Energy or generate 20.11% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Companhia Paranaense de vs. Talen Energy
Performance |
| Timeline |
| Companhia Paranaense |
| Talen Energy |
Companhia Paranaense and Talen Energy Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Companhia Paranaense and Talen Energy
The main advantage of trading using opposite Companhia Paranaense and Talen Energy positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Companhia Paranaense position performs unexpectedly, Talen 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 Talen Energy will offset losses from the drop in Talen 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 |
| Talen Energy vs. Tesla Inc | Talen Energy vs. Modine Manufacturing | Talen Energy vs. BorgWarner | Talen Energy vs. WiMi Hologram Cloud |
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 Commodity Directory module to find actively traded commodities issued by global exchanges.
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