Correlation Between Energisa and Santos Brasil
Can any of the company-specific risk be diversified away by investing in both Energisa and Santos Brasil 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 Santos Brasil into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Energisa SA and Santos Brasil Participaes, you can compare the effects of market volatilities on Energisa and Santos Brasil 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 Santos Brasil. Check out your portfolio center. Please also check ongoing floating volatility patterns of Energisa and Santos Brasil.
Diversification Opportunities for Energisa and Santos Brasil
0.22 | Correlation Coefficient |
Modest diversification
The 3 months correlation between Energisa and Santos is 0.22. Overlapping area represents the amount of risk that can be diversified away by holding Energisa SA and Santos Brasil Participaes in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Santos Brasil Participaes 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 Santos Brasil. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Santos Brasil Participaes has no effect on the direction of Energisa i.e., Energisa and Santos Brasil go up and down completely randomly.
Pair Corralation between Energisa and Santos Brasil
Assuming the 90 days trading horizon Energisa SA is expected to under-perform the Santos Brasil. But the stock apears to be less risky and, when comparing its historical volatility, Energisa SA is 1.76 times less risky than Santos Brasil. The stock trades about -0.07 of its potential returns per unit of risk. The Santos Brasil Participaes is currently generating about 0.04 of returns per unit of risk over similar time horizon. If you would invest 1,171 in Santos Brasil Participaes on September 2, 2024 and sell it today you would earn a total of 111.00 from holding Santos Brasil Participaes or generate 9.48% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Energisa SA vs. Santos Brasil Participaes
Performance |
| Timeline |
| Energisa SA |
| Santos Brasil Participaes |
Energisa and Santos Brasil Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Energisa and Santos Brasil
The main advantage of trading using opposite Energisa and Santos Brasil positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Energisa position performs unexpectedly, Santos Brasil 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 Santos Brasil will offset losses from the drop in Santos Brasil's long position.| Energisa vs. Equatorial Energia SA | Energisa vs. CPFL Energia SA | Energisa vs. Eneva SA | Energisa vs. Companhia de Saneamento |
| Santos Brasil vs. Livetech da Bahia | Santos Brasil vs. Paycom Software | Santos Brasil vs. The Trade Desk | Santos Brasil vs. Lupatech 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 Idea Breakdown module to analyze constituents of all Macroaxis ideas. Macroaxis investment ideas are predefined, sector-focused investing themes.
Other Complementary Tools
| Stocks Directory Find actively traded stocks across global markets | |
| Equity Search Search for actively traded equities including funds and ETFs from over 30 global markets | |
| Portfolio Analyzer Portfolio analysis module that provides access to portfolio diagnostics and optimization engine | |
| Money Managers Screen money managers from public funds and ETFs managed around the world | |
| Sign In To Macroaxis Sign in to explore Macroaxis' wealth optimization platform and fintech modules |