Correlation Between Energisa and Nasdaq
Can any of the company-specific risk be diversified away by investing in both Energisa and Nasdaq 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 Nasdaq into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Energisa SA and Nasdaq Inc, you can compare the effects of market volatilities on Energisa and Nasdaq 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 Nasdaq. Check out your portfolio center. Please also check ongoing floating volatility patterns of Energisa and Nasdaq.
Diversification Opportunities for Energisa and Nasdaq
Pay attention - limited upside
The 3 months correlation between Energisa and Nasdaq is -0.75. Overlapping area represents the amount of risk that can be diversified away by holding Energisa SA and Nasdaq Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Nasdaq Inc 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 Nasdaq. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Nasdaq Inc has no effect on the direction of Energisa i.e., Energisa and Nasdaq go up and down completely randomly.
Pair Corralation between Energisa and Nasdaq
Assuming the 90 days trading horizon Energisa is expected to generate 6.93 times less return on investment than Nasdaq. In addition to that, Energisa is 1.04 times more volatile than Nasdaq Inc. It trades about 0.01 of its total potential returns per unit of risk. Nasdaq Inc is currently generating about 0.07 per unit of volatility. If you would invest 16,271 in Nasdaq Inc on August 31, 2024 and sell it today you would earn a total of 8,806 from holding Nasdaq Inc or generate 54.12% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 99.79% |
| Values | Daily Returns |
Energisa SA vs. Nasdaq Inc
Performance |
| Timeline |
| Energisa SA |
| Nasdaq Inc |
Energisa and Nasdaq Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Energisa and Nasdaq
The main advantage of trading using opposite Energisa and Nasdaq positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Energisa position performs unexpectedly, Nasdaq 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 Nasdaq will offset losses from the drop in Nasdaq'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 Funds Screener module to find actively-traded funds from around the world traded on over 30 global exchanges.
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