Correlation Between Energisa and Luggo Fundo
Can any of the company-specific risk be diversified away by investing in both Energisa and Luggo Fundo 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 Luggo Fundo into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Energisa SA and Luggo Fundo De, you can compare the effects of market volatilities on Energisa and Luggo Fundo 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 Luggo Fundo. Check out your portfolio center. Please also check ongoing floating volatility patterns of Energisa and Luggo Fundo.
Diversification Opportunities for Energisa and Luggo Fundo
0.87 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Energisa and Luggo is 0.87. Overlapping area represents the amount of risk that can be diversified away by holding Energisa SA and Luggo Fundo De in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Luggo Fundo De 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 Luggo Fundo. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Luggo Fundo De has no effect on the direction of Energisa i.e., Energisa and Luggo Fundo go up and down completely randomly.
Pair Corralation between Energisa and Luggo Fundo
Assuming the 90 days trading horizon Energisa SA is expected to generate 1.84 times more return on investment than Luggo Fundo. However, Energisa is 1.84 times more volatile than Luggo Fundo De. It trades about 0.01 of its potential returns per unit of risk. Luggo Fundo De is currently generating about 0.01 per unit of risk. If you would invest 4,033 in Energisa SA on August 30, 2024 and sell it today you would earn a total of 139.00 from holding Energisa SA or generate 3.45% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Energisa SA vs. Luggo Fundo De
Performance |
| Timeline |
| Energisa SA |
| Luggo Fundo De |
Energisa and Luggo Fundo Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Energisa and Luggo Fundo
The main advantage of trading using opposite Energisa and Luggo Fundo positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Energisa position performs unexpectedly, Luggo Fundo 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 Luggo Fundo will offset losses from the drop in Luggo Fundo's long position.| Energisa vs. Equatorial Energia SA | Energisa vs. CPFL Energia SA | Energisa vs. Eneva SA | Energisa vs. Companhia de Saneamento |
| Luggo Fundo vs. Energisa SA | Luggo Fundo vs. BTG Pactual Logstica | Luggo Fundo vs. Plano Plano Desenvolvimento | Luggo Fundo 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 ETFs module to find actively traded Exchange Traded Funds (ETF) from around the world.
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