Correlation Between Energisa and Empresa Metropolitana
Can any of the company-specific risk be diversified away by investing in both Energisa and Empresa Metropolitana 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 Empresa Metropolitana into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Energisa SA and Empresa Metropolitana de, you can compare the effects of market volatilities on Energisa and Empresa Metropolitana 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 Empresa Metropolitana. Check out your portfolio center. Please also check ongoing floating volatility patterns of Energisa and Empresa Metropolitana.
Diversification Opportunities for Energisa and Empresa Metropolitana
0.18 | Correlation Coefficient |
Average diversification
The 3 months correlation between Energisa and Empresa is 0.18. Overlapping area represents the amount of risk that can be diversified away by holding Energisa SA and Empresa Metropolitana de in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Empresa Metropolitana 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 Empresa Metropolitana. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Empresa Metropolitana has no effect on the direction of Energisa i.e., Energisa and Empresa Metropolitana go up and down completely randomly.
Pair Corralation between Energisa and Empresa Metropolitana
Assuming the 90 days trading horizon Energisa SA is expected to generate 0.88 times more return on investment than Empresa Metropolitana. However, Energisa SA is 1.13 times less risky than Empresa Metropolitana. It trades about 0.02 of its potential returns per unit of risk. Empresa Metropolitana de is currently generating about 0.01 per unit of risk. If you would invest 620.00 in Energisa SA on September 1, 2024 and sell it today you would earn a total of 96.00 from holding Energisa SA or generate 15.48% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 99.35% |
| Values | Daily Returns |
Energisa SA vs. Empresa Metropolitana de
Performance |
| Timeline |
| Energisa SA |
| Empresa Metropolitana |
Energisa and Empresa Metropolitana Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Energisa and Empresa Metropolitana
The main advantage of trading using opposite Energisa and Empresa Metropolitana positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Energisa position performs unexpectedly, Empresa Metropolitana 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 Empresa Metropolitana will offset losses from the drop in Empresa Metropolitana's long position.| Energisa vs. Energisa SA | Energisa vs. Energisa SA | Energisa vs. Companhia Energtica de | Energisa vs. Empresa Metropolitana de |
| Empresa Metropolitana vs. Companhia Energtica do | Empresa Metropolitana vs. CTEEP Companhia | Empresa Metropolitana vs. Companhia de Gs | Empresa Metropolitana vs. Companhia Paranaense 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 Volatility Analysis module to get historical volatility and risk analysis based on latest market data.
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