Correlation Between Empresa Metropolitana and Energisa
Can any of the company-specific risk be diversified away by investing in both Empresa Metropolitana and Energisa 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 Empresa Metropolitana and Energisa into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Empresa Metropolitana de and Energisa SA, you can compare the effects of market volatilities on Empresa Metropolitana and Energisa 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 Empresa Metropolitana with a short position of Energisa. Check out your portfolio center. Please also check ongoing floating volatility patterns of Empresa Metropolitana and Energisa.
Diversification Opportunities for Empresa Metropolitana and Energisa
0.24 | Correlation Coefficient |
Modest diversification
The 3 months correlation between Empresa and Energisa is 0.24. Overlapping area represents the amount of risk that can be diversified away by holding Empresa Metropolitana de and Energisa SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Energisa SA and Empresa Metropolitana 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 Empresa Metropolitana de are associated (or correlated) with Energisa. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Energisa SA has no effect on the direction of Empresa Metropolitana i.e., Empresa Metropolitana and Energisa go up and down completely randomly.
Pair Corralation between Empresa Metropolitana and Energisa
Assuming the 90 days trading horizon Empresa Metropolitana de is expected to under-perform the Energisa. In addition to that, Empresa Metropolitana is 1.18 times more volatile than Energisa SA. It trades about -0.03 of its total potential returns per unit of risk. Energisa SA is currently generating about -0.01 per unit of volatility. If you would invest 853.00 in Energisa SA on August 28, 2024 and sell it today you would lose (125.00) from holding Energisa SA or give up 14.65% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 99.72% |
| Values | Daily Returns |
Empresa Metropolitana de vs. Energisa SA
Performance |
| Timeline |
| Empresa Metropolitana |
| Energisa SA |
Empresa Metropolitana and Energisa Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Empresa Metropolitana and Energisa
The main advantage of trading using opposite Empresa Metropolitana and Energisa positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Empresa Metropolitana position performs unexpectedly, Energisa 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 Energisa will offset losses from the drop in Energisa's long position.| Empresa Metropolitana vs. CTEEP Companhia | Empresa Metropolitana vs. BB Seguridade Participacoes | Empresa Metropolitana vs. Transmissora Aliana de | Empresa Metropolitana vs. Itasa Investimentos |
| Energisa vs. Energisa SA | Energisa vs. Energisa SA | Energisa vs. Companhia Energtica de | Energisa vs. Empresa Metropolitana de |
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 Volatility Analysis module to get historical volatility and risk analysis based on latest market data.
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