Correlation Between Energisa and General Dynamics
Can any of the company-specific risk be diversified away by investing in both Energisa and General Dynamics 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 General Dynamics into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Energisa SA and General Dynamics, you can compare the effects of market volatilities on Energisa and General Dynamics 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 General Dynamics. Check out your portfolio center. Please also check ongoing floating volatility patterns of Energisa and General Dynamics.
Diversification Opportunities for Energisa and General Dynamics
-0.4 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Energisa and General is -0.4. Overlapping area represents the amount of risk that can be diversified away by holding Energisa SA and General Dynamics in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on General Dynamics 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 General Dynamics. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of General Dynamics has no effect on the direction of Energisa i.e., Energisa and General Dynamics go up and down completely randomly.
Pair Corralation between Energisa and General Dynamics
Assuming the 90 days trading horizon Energisa SA is expected to under-perform the General Dynamics. But the stock apears to be less risky and, when comparing its historical volatility, Energisa SA is 1.07 times less risky than General Dynamics. The stock trades about -0.17 of its potential returns per unit of risk. The General Dynamics is currently generating about 0.02 of returns per unit of risk over similar time horizon. If you would invest 167,832 in General Dynamics on September 2, 2024 and sell it today you would earn a total of 1,828 from holding General Dynamics or generate 1.09% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Energisa SA vs. General Dynamics
Performance |
| Timeline |
| Energisa SA |
| General Dynamics |
Energisa and General Dynamics Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Energisa and General Dynamics
The main advantage of trading using opposite Energisa and General Dynamics positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Energisa position performs unexpectedly, General Dynamics 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 General Dynamics will offset losses from the drop in General Dynamics' long position.| Energisa vs. Equatorial Energia SA | Energisa vs. CPFL Energia SA | Energisa vs. Eneva SA | Energisa vs. Companhia de Saneamento |
| General Dynamics vs. Taurus Armas SA | General Dynamics vs. Fras le SA | General Dynamics vs. Western Digital | General Dynamics vs. Energisa SA |
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 Alpha Finder module to use alpha and beta coefficients to find investment opportunities after accounting for the risk.
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