Correlation Between Energisa and Vinci Energia
Can any of the company-specific risk be diversified away by investing in both Energisa and Vinci Energia 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 Vinci Energia into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Energisa SA and Vinci Energia Fundo, you can compare the effects of market volatilities on Energisa and Vinci Energia 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 Vinci Energia. Check out your portfolio center. Please also check ongoing floating volatility patterns of Energisa and Vinci Energia.
Diversification Opportunities for Energisa and Vinci Energia
0.78 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Energisa and Vinci is 0.78. Overlapping area represents the amount of risk that can be diversified away by holding Energisa SA and Vinci Energia Fundo in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Vinci Energia 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 Vinci Energia. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Vinci Energia Fundo has no effect on the direction of Energisa i.e., Energisa and Vinci Energia go up and down completely randomly.
Pair Corralation between Energisa and Vinci Energia
Assuming the 90 days trading horizon Energisa SA is expected to generate 0.22 times more return on investment than Vinci Energia. However, Energisa SA is 4.49 times less risky than Vinci Energia. It trades about -0.11 of its potential returns per unit of risk. Vinci Energia Fundo is currently generating about -0.21 per unit of risk. If you would invest 4,479 in Energisa SA on August 30, 2024 and sell it today you would lose (307.00) from holding Energisa SA or give up 6.85% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 95.24% |
| Values | Daily Returns |
Energisa SA vs. Vinci Energia Fundo
Performance |
| Timeline |
| Energisa SA |
| Vinci Energia Fundo |
Energisa and Vinci Energia Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Energisa and Vinci Energia
The main advantage of trading using opposite Energisa and Vinci Energia positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Energisa position performs unexpectedly, Vinci Energia 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 Vinci Energia will offset losses from the drop in Vinci Energia's long position.| Energisa vs. Equatorial Energia SA | Energisa vs. CPFL Energia SA | Energisa vs. Eneva SA | Energisa vs. Companhia de Saneamento |
| Vinci Energia vs. Energisa SA | Vinci Energia vs. BTG Pactual Logstica | Vinci Energia vs. Plano Plano Desenvolvimento | Vinci Energia vs. The Procter Gamble |
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 Pair Correlation module to compare performance and examine fundamental relationship between any two equity instruments.
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