Correlation Between Energisa and Hospital Mater
Can any of the company-specific risk be diversified away by investing in both Energisa and Hospital Mater 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 Hospital Mater into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Energisa SA and Hospital Mater Dei, you can compare the effects of market volatilities on Energisa and Hospital Mater 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 Hospital Mater. Check out your portfolio center. Please also check ongoing floating volatility patterns of Energisa and Hospital Mater.
Diversification Opportunities for Energisa and Hospital Mater
0.86 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Energisa and Hospital is 0.86. Overlapping area represents the amount of risk that can be diversified away by holding Energisa SA and Hospital Mater Dei in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Hospital Mater Dei 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 Hospital Mater. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Hospital Mater Dei has no effect on the direction of Energisa i.e., Energisa and Hospital Mater go up and down completely randomly.
Pair Corralation between Energisa and Hospital Mater
Assuming the 90 days trading horizon Energisa SA is expected to under-perform the Hospital Mater. But the stock apears to be less risky and, when comparing its historical volatility, Energisa SA is 1.31 times less risky than Hospital Mater. The stock trades about -0.1 of its potential returns per unit of risk. The Hospital Mater Dei is currently generating about 0.04 of returns per unit of risk over similar time horizon. If you would invest 407.00 in Hospital Mater Dei on September 2, 2024 and sell it today you would earn a total of 6.00 from holding Hospital Mater Dei or generate 1.47% 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. Hospital Mater Dei
Performance |
| Timeline |
| Energisa SA |
| Hospital Mater Dei |
Energisa and Hospital Mater Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Energisa and Hospital Mater
The main advantage of trading using opposite Energisa and Hospital Mater positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Energisa position performs unexpectedly, Hospital Mater 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 Hospital Mater will offset losses from the drop in Hospital Mater's long position.| Energisa vs. Equatorial Energia SA | Energisa vs. CPFL Energia SA | Energisa vs. Eneva SA | Energisa vs. Companhia de Saneamento |
| Hospital Mater vs. CVS Health | Hospital Mater vs. Healthpeak Properties | Hospital Mater vs. Verizon Communications | Hospital Mater vs. Zoom Video Communications |
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 Suggestion module to get suggestions outside of your existing asset allocation including your own model portfolios.
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