Correlation Between Eneva SA and CPFL Energia
Can any of the company-specific risk be diversified away by investing in both Eneva SA and CPFL Energia 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 Eneva SA and CPFL Energia into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Eneva SA and CPFL Energia SA, you can compare the effects of market volatilities on Eneva SA and CPFL Energia 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 Eneva SA with a short position of CPFL Energia. Check out your portfolio center. Please also check ongoing floating volatility patterns of Eneva SA and CPFL Energia.
Diversification Opportunities for Eneva SA and CPFL Energia
0.71 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Eneva and CPFL is 0.71. Overlapping area represents the amount of risk that can be diversified away by holding Eneva SA and CPFL Energia SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on CPFL Energia SA and Eneva SA 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 Eneva SA are associated (or correlated) with CPFL Energia. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of CPFL Energia SA has no effect on the direction of Eneva SA i.e., Eneva SA and CPFL Energia go up and down completely randomly.
Pair Corralation between Eneva SA and CPFL Energia
Assuming the 90 days trading horizon Eneva SA is expected to generate 10.69 times less return on investment than CPFL Energia. In addition to that, Eneva SA is 1.4 times more volatile than CPFL Energia SA. It trades about 0.0 of its total potential returns per unit of risk. CPFL Energia SA is currently generating about 0.04 per unit of volatility. If you would invest 3,494 in CPFL Energia SA on January 21, 2025 and sell it today you would earn a total of 331.00 from holding CPFL Energia SA or generate 9.47% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Eneva SA vs. CPFL Energia SA
Performance |
| Timeline |
| Eneva SA |
| CPFL Energia SA |
Eneva SA and CPFL Energia Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Eneva SA and CPFL Energia
The main advantage of trading using opposite Eneva SA and CPFL Energia positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Eneva SA position performs unexpectedly, CPFL Energia 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 CPFL Energia will offset losses from the drop in CPFL Energia's long position.| Eneva SA vs. Banco BTG Pactual | Eneva SA vs. Cosan SA | Eneva SA vs. Banco Pan SA | Eneva SA vs. Equatorial Energia SA |
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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 Fundamentals Comparison module to compare fundamentals across multiple equities to find investing opportunities.
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