Correlation Between Energisa and Waste Management
Can any of the company-specific risk be diversified away by investing in both Energisa and Waste Management 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 Waste Management into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Energisa SA and Waste Management, you can compare the effects of market volatilities on Energisa and Waste Management 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 Waste Management. Check out your portfolio center. Please also check ongoing floating volatility patterns of Energisa and Waste Management.
Diversification Opportunities for Energisa and Waste Management
0.62 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Energisa and Waste is 0.62. Overlapping area represents the amount of risk that can be diversified away by holding Energisa SA and Waste Management in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Waste Management 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 Waste Management. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Waste Management has no effect on the direction of Energisa i.e., Energisa and Waste Management go up and down completely randomly.
Pair Corralation between Energisa and Waste Management
Assuming the 90 days trading horizon Energisa is expected to generate 1.0 times less return on investment than Waste Management. In addition to that, Energisa is 1.72 times more volatile than Waste Management. It trades about 0.12 of its total potential returns per unit of risk. Waste Management is currently generating about 0.2 per unit of volatility. If you would invest 62,928 in Waste Management on November 28, 2024 and sell it today you would earn a total of 3,229 from holding Waste Management or generate 5.13% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Energisa SA vs. Waste Management
Performance |
| Timeline |
| Energisa SA |
| Waste Management |
Energisa and Waste Management Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Energisa and Waste Management
The main advantage of trading using opposite Energisa and Waste Management positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Energisa position performs unexpectedly, Waste Management 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 Waste Management will offset losses from the drop in Waste Management's long position.| Energisa vs. Equatorial Energia SA | Energisa vs. CPFL Energia SA | Energisa vs. Eneva SA | Energisa vs. Companhia de Saneamento |
| Waste Management vs. Microchip Technology Incorporated | Waste Management vs. Paycom Software | Waste Management vs. MAHLE Metal Leve | Waste Management vs. GP Investments |
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 Stock Tickers module to use high-impact, comprehensive, and customizable stock tickers that can be easily integrated to any websites.
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