Correlation Between Eneva SA and Centrais Eltricas
Can any of the company-specific risk be diversified away by investing in both Eneva SA and Centrais Eltricas 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 Centrais Eltricas into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Eneva SA and Centrais Eltricas Brasileiras, you can compare the effects of market volatilities on Eneva SA and Centrais Eltricas 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 Centrais Eltricas. Check out your portfolio center. Please also check ongoing floating volatility patterns of Eneva SA and Centrais Eltricas.
Diversification Opportunities for Eneva SA and Centrais Eltricas
0.59 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Eneva and Centrais is 0.59. Overlapping area represents the amount of risk that can be diversified away by holding Eneva SA and Centrais Eltricas Brasileiras in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Centrais Eltricas 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 Centrais Eltricas. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Centrais Eltricas has no effect on the direction of Eneva SA i.e., Eneva SA and Centrais Eltricas go up and down completely randomly.
Pair Corralation between Eneva SA and Centrais Eltricas
Assuming the 90 days trading horizon Eneva SA is expected to under-perform the Centrais Eltricas. In addition to that, Eneva SA is 1.01 times more volatile than Centrais Eltricas Brasileiras. It trades about -0.43 of its total potential returns per unit of risk. Centrais Eltricas Brasileiras is currently generating about -0.18 per unit of volatility. If you would invest 4,245 in Centrais Eltricas Brasileiras on August 28, 2024 and sell it today you would lose (208.00) from holding Centrais Eltricas Brasileiras or give up 4.9% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Eneva SA vs. Centrais Eltricas Brasileiras
Performance |
| Timeline |
| Eneva SA |
| Centrais Eltricas |
Eneva SA and Centrais Eltricas Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Eneva SA and Centrais Eltricas
The main advantage of trading using opposite Eneva SA and Centrais Eltricas positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Eneva SA position performs unexpectedly, Centrais Eltricas 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 Centrais Eltricas will offset losses from the drop in Centrais Eltricas' long position.| Eneva SA vs. BB Seguridade Participacoes | Eneva SA vs. Engie Brasil Energia | Eneva SA vs. CTEEP Companhia | Eneva SA vs. Itasa Investimentos |
| Centrais Eltricas vs. CTEEP Companhia | Centrais Eltricas vs. BB Seguridade Participacoes | Centrais Eltricas vs. Transmissora Aliana de | Centrais Eltricas vs. Itasa Investimentos |
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 Headlines Timeline module to stay connected to all market stories and filter out noise. Drill down to analyze hype elasticity.
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