Correlation Between Energisa and Coca Cola
Can any of the company-specific risk be diversified away by investing in both Energisa and Coca Cola 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 Energisa and Coca Cola into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Energisa SA and The Coca Cola, you can compare the effects of market volatilities on Energisa and Coca Cola 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 Energisa with a short position of Coca Cola. Check out your portfolio center. Please also check ongoing floating volatility patterns of Energisa and Coca Cola.
Diversification Opportunities for Energisa and Coca Cola
Poor diversification
The 3 months correlation between Energisa and Coca is 0.72. Overlapping area represents the amount of risk that can be diversified away by holding Energisa SA and The Coca Cola in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Coca Cola and Energisa 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 Energisa SA are associated (or correlated) with Coca Cola. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Coca Cola has no effect on the direction of Energisa i.e., Energisa and Coca Cola go up and down completely randomly.
Pair Corralation between Energisa and Coca Cola
Assuming the 90 days trading horizon Energisa is expected to generate 1.66 times less return on investment than Coca Cola. In addition to that, Energisa is 1.48 times more volatile than The Coca Cola. It trades about 0.01 of its total potential returns per unit of risk. The Coca Cola is currently generating about 0.03 per unit of volatility. If you would invest 5,348 in The Coca Cola on August 27, 2024 and sell it today you would earn a total of 826.00 from holding The Coca Cola or generate 15.45% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 99.8% |
| Values | Daily Returns |
Energisa SA vs. The Coca Cola
Performance |
| Timeline |
| Energisa SA |
| Coca Cola |
Energisa and Coca Cola Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Energisa and Coca Cola
The main advantage of trading using opposite Energisa and Coca Cola positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Energisa position performs unexpectedly, Coca Cola 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 Coca Cola will offset losses from the drop in Coca Cola's long position.| Energisa vs. Centrais Eltricas Brasileiras | Energisa vs. Companhia Energtica de | Energisa vs. Companhia de Saneamento | Energisa vs. Companhia Siderrgica Nacional |
| Coca Cola vs. Monster Beverage | Coca Cola vs. Energisa SA | Coca Cola vs. BTG Pactual Logstica | Coca Cola vs. Plano Plano Desenvolvimento |
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 Competition Analyzer module to analyze and compare many basic indicators for a group of related or unrelated entities.
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