Correlation Between Companhia Paranaense and Vistra Energy
Can any of the company-specific risk be diversified away by investing in both Companhia Paranaense and Vistra 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 Vistra 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 Vistra Energy Corp, you can compare the effects of market volatilities on Companhia Paranaense and Vistra 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 Vistra Energy. Check out your portfolio center. Please also check ongoing floating volatility patterns of Companhia Paranaense and Vistra Energy.
Diversification Opportunities for Companhia Paranaense and Vistra Energy
-0.5 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Companhia and Vistra is -0.5. Overlapping area represents the amount of risk that can be diversified away by holding Companhia Paranaense de and Vistra Energy Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Vistra Energy Corp 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 Vistra Energy. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Vistra Energy Corp has no effect on the direction of Companhia Paranaense i.e., Companhia Paranaense and Vistra Energy go up and down completely randomly.
Pair Corralation between Companhia Paranaense and Vistra Energy
Given the investment horizon of 90 days Companhia Paranaense de is expected to under-perform the Vistra Energy. But the stock apears to be less risky and, when comparing its historical volatility, Companhia Paranaense de is 1.52 times less risky than Vistra Energy. The stock trades about -0.04 of its potential returns per unit of risk. The Vistra Energy Corp is currently generating about 0.15 of returns per unit of risk over similar time horizon. If you would invest 14,807 in Vistra Energy Corp on October 10, 2024 and sell it today you would earn a total of 1,530 from holding Vistra Energy Corp or generate 10.33% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Companhia Paranaense de vs. Vistra Energy Corp
Performance |
| Timeline |
| Companhia Paranaense |
| Vistra Energy Corp |
Companhia Paranaense and Vistra Energy Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Companhia Paranaense and Vistra Energy
The main advantage of trading using opposite Companhia Paranaense and Vistra Energy positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Companhia Paranaense position performs unexpectedly, Vistra 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 Vistra Energy will offset losses from the drop in Vistra Energy's long position.| Companhia Paranaense vs. Consol Energy | Companhia Paranaense vs. American Airlines Group | Companhia Paranaense vs. Azul SA | Companhia Paranaense vs. Copa Holdings SA |
| Vistra Energy vs. Pampa Energia SA | Vistra Energy vs. TransAlta Corp | Vistra Energy vs. Kenon Holdings | Vistra Energy 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 Money Flow Index module to determine momentum by analyzing Money Flow Index and other technical indicators.
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