Correlation Between Energisa and XP Selection
Can any of the company-specific risk be diversified away by investing in both Energisa and XP Selection 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 XP Selection into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Energisa SA and XP Selection Fundo, you can compare the effects of market volatilities on Energisa and XP Selection 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 XP Selection. Check out your portfolio center. Please also check ongoing floating volatility patterns of Energisa and XP Selection.
Diversification Opportunities for Energisa and XP Selection
0.94 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between Energisa and XPSF11 is 0.94. Overlapping area represents the amount of risk that can be diversified away by holding Energisa SA and XP Selection Fundo in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on XP Selection 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 XP Selection. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of XP Selection Fundo has no effect on the direction of Energisa i.e., Energisa and XP Selection go up and down completely randomly.
Pair Corralation between Energisa and XP Selection
Assuming the 90 days trading horizon Energisa SA is expected to generate 1.7 times more return on investment than XP Selection. However, Energisa is 1.7 times more volatile than XP Selection Fundo. It trades about -0.07 of its potential returns per unit of risk. XP Selection Fundo is currently generating about -0.14 per unit of risk. If you would invest 4,686 in Energisa SA on September 1, 2024 and sell it today you would lose (665.00) from holding Energisa SA or give up 14.19% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Energisa SA vs. XP Selection Fundo
Performance |
| Timeline |
| Energisa SA |
| XP Selection Fundo |
Energisa and XP Selection Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Energisa and XP Selection
The main advantage of trading using opposite Energisa and XP Selection positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Energisa position performs unexpectedly, XP Selection 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 XP Selection will offset losses from the drop in XP Selection's long position.| Energisa vs. Transmissora Aliana de | Energisa vs. CTEEP Companhia | Energisa vs. Companhia Paranaense de | Energisa vs. Companhia Energtica de |
| XP Selection vs. Energisa SA | XP Selection vs. BTG Pactual Logstica | XP Selection vs. Plano Plano Desenvolvimento | XP Selection 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 Positions Ratings module to determine portfolio positions ratings based on digital equity recommendations. Macroaxis instant position ratings are based on combination of fundamental analysis and risk-adjusted market performance.
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