Correlation Between Energisa and JFL Living
Can any of the company-specific risk be diversified away by investing in both Energisa and JFL Living 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 JFL Living into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Energisa SA and JFL Living Fundo, you can compare the effects of market volatilities on Energisa and JFL Living 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 JFL Living. Check out your portfolio center. Please also check ongoing floating volatility patterns of Energisa and JFL Living.
Diversification Opportunities for Energisa and JFL Living
-0.41 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Energisa and JFL is -0.41. Overlapping area represents the amount of risk that can be diversified away by holding Energisa SA and JFL Living Fundo in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on JFL Living Fundo 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 JFL Living. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of JFL Living Fundo has no effect on the direction of Energisa i.e., Energisa and JFL Living go up and down completely randomly.
Pair Corralation between Energisa and JFL Living
Assuming the 90 days trading horizon Energisa is expected to generate 2.74 times less return on investment than JFL Living. In addition to that, Energisa is 1.12 times more volatile than JFL Living Fundo. It trades about 0.01 of its total potential returns per unit of risk. JFL Living Fundo is currently generating about 0.04 per unit of volatility. If you would invest 5,823 in JFL Living Fundo on August 30, 2024 and sell it today you would earn a total of 1,412 from holding JFL Living Fundo or generate 24.25% 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. JFL Living Fundo
Performance |
| Timeline |
| Energisa SA |
| JFL Living Fundo |
Energisa and JFL Living Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Energisa and JFL Living
The main advantage of trading using opposite Energisa and JFL Living positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Energisa position performs unexpectedly, JFL Living 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 JFL Living will offset losses from the drop in JFL Living's long position.| Energisa vs. Equatorial Energia SA | Energisa vs. CPFL Energia SA | Energisa vs. Eneva SA | Energisa vs. Companhia de Saneamento |
| JFL Living vs. Energisa SA | JFL Living vs. BTG Pactual Logstica | JFL Living vs. Plano Plano Desenvolvimento | JFL Living vs. The Procter Gamble |
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 Portfolio File Import module to quickly import all of your third-party portfolios from your local drive in csv format.
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