Correlation Between Energisa and FDO INV
Can any of the company-specific risk be diversified away by investing in both Energisa and FDO INV 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 FDO INV into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Energisa SA and FDO INV IMOB, you can compare the effects of market volatilities on Energisa and FDO INV 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 FDO INV. Check out your portfolio center. Please also check ongoing floating volatility patterns of Energisa and FDO INV.
Diversification Opportunities for Energisa and FDO INV
Very poor diversification
The 3 months correlation between Energisa and FDO is 0.83. Overlapping area represents the amount of risk that can be diversified away by holding Energisa SA and FDO INV IMOB in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on FDO INV IMOB 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 FDO INV. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of FDO INV IMOB has no effect on the direction of Energisa i.e., Energisa and FDO INV go up and down completely randomly.
Pair Corralation between Energisa and FDO INV
Assuming the 90 days trading horizon Energisa SA is expected to under-perform the FDO INV. In addition to that, Energisa is 1.59 times more volatile than FDO INV IMOB. It trades about -0.01 of its total potential returns per unit of risk. FDO INV IMOB is currently generating about -0.01 per unit of volatility. If you would invest 7,772 in FDO INV IMOB on September 2, 2024 and sell it today you would lose (490.00) from holding FDO INV IMOB or give up 6.3% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 99.47% |
| Values | Daily Returns |
Energisa SA vs. FDO INV IMOB
Performance |
| Timeline |
| Energisa SA |
| FDO INV IMOB |
Energisa and FDO INV Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Energisa and FDO INV
The main advantage of trading using opposite Energisa and FDO INV positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Energisa position performs unexpectedly, FDO INV 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 FDO INV will offset losses from the drop in FDO INV's long position.| Energisa vs. Equatorial Energia SA | Energisa vs. CPFL Energia SA | Energisa vs. Eneva SA | Energisa vs. Companhia de Saneamento |
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 Bonds Directory module to find actively traded corporate debentures issued by US companies.
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