Correlation Between Energisa and United Parcel
Can any of the company-specific risk be diversified away by investing in both Energisa and United Parcel 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 United Parcel into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Energisa SA and United Parcel Service, you can compare the effects of market volatilities on Energisa and United Parcel 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 United Parcel. Check out your portfolio center. Please also check ongoing floating volatility patterns of Energisa and United Parcel.
Diversification Opportunities for Energisa and United Parcel
-0.82 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between Energisa and United is -0.82. Overlapping area represents the amount of risk that can be diversified away by holding Energisa SA and United Parcel Service in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on United Parcel Service 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 United Parcel. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of United Parcel Service has no effect on the direction of Energisa i.e., Energisa and United Parcel go up and down completely randomly.
Pair Corralation between Energisa and United Parcel
Assuming the 90 days trading horizon Energisa SA is expected to under-perform the United Parcel. But the stock apears to be less risky and, when comparing its historical volatility, Energisa SA is 1.34 times less risky than United Parcel. The stock trades about -0.07 of its potential returns per unit of risk. The United Parcel Service is currently generating about 0.06 of returns per unit of risk over similar time horizon. If you would invest 4,481 in United Parcel Service on September 3, 2024 and sell it today you would earn a total of 629.00 from holding United Parcel Service or generate 14.04% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Energisa SA vs. United Parcel Service
Performance |
| Timeline |
| Energisa SA |
| United Parcel Service |
Energisa and United Parcel Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Energisa and United Parcel
The main advantage of trading using opposite Energisa and United Parcel positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Energisa position performs unexpectedly, United Parcel 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 United Parcel will offset losses from the drop in United Parcel's long position.| Energisa vs. Equatorial Energia SA | Energisa vs. CPFL Energia SA | Energisa vs. Eneva SA | Energisa vs. Companhia de Saneamento |
| United Parcel vs. FedEx | United Parcel vs. Sequoia Logstica e | United Parcel vs. Energisa SA | United Parcel vs. BTG Pactual Logstica |
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 Competition Analyzer module to analyze and compare many basic indicators for a group of related or unrelated entities.
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