Correlation Between Energisa and TRX Renda
Can any of the company-specific risk be diversified away by investing in both Energisa and TRX Renda 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 TRX Renda into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Energisa SA and TRX Renda Fundo, you can compare the effects of market volatilities on Energisa and TRX Renda 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 TRX Renda. Check out your portfolio center. Please also check ongoing floating volatility patterns of Energisa and TRX Renda.
Diversification Opportunities for Energisa and TRX Renda
Very poor diversification
The 3 months correlation between Energisa and TRX is 0.81. Overlapping area represents the amount of risk that can be diversified away by holding Energisa SA and TRX Renda Fundo in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on TRX Renda 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 TRX Renda. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of TRX Renda Fundo has no effect on the direction of Energisa i.e., Energisa and TRX Renda go up and down completely randomly.
Pair Corralation between Energisa and TRX Renda
Assuming the 90 days trading horizon Energisa SA is expected to under-perform the TRX Renda. In addition to that, Energisa is 3.35 times more volatile than TRX Renda Fundo. It trades about -0.1 of its total potential returns per unit of risk. TRX Renda Fundo is currently generating about 0.24 per unit of volatility. If you would invest 10,014 in TRX Renda Fundo on September 2, 2024 and sell it today you would earn a total of 266.00 from holding TRX Renda Fundo or generate 2.66% 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. TRX Renda Fundo
Performance |
| Timeline |
| Energisa SA |
| TRX Renda Fundo |
Energisa and TRX Renda Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Energisa and TRX Renda
The main advantage of trading using opposite Energisa and TRX Renda positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Energisa position performs unexpectedly, TRX Renda 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 TRX Renda will offset losses from the drop in TRX Renda's long position.| Energisa vs. Equatorial Energia SA | Energisa vs. CPFL Energia SA | Energisa vs. Eneva SA | Energisa vs. Companhia de Saneamento |
| TRX Renda vs. Energisa SA | TRX Renda vs. BTG Pactual Logstica | TRX Renda vs. Plano Plano Desenvolvimento | TRX Renda vs. Companhia Habitasul de |
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 Options Analysis module to analyze and evaluate options and option chains as a potential hedge for your portfolios.
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