Correlation Between Engie SA and Companhia Energetica
Can any of the company-specific risk be diversified away by investing in both Engie SA and Companhia Energetica 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 Engie SA and Companhia Energetica into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Engie SA ADR and Companhia Energetica de, you can compare the effects of market volatilities on Engie SA and Companhia Energetica 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 Engie SA with a short position of Companhia Energetica. Check out your portfolio center. Please also check ongoing floating volatility patterns of Engie SA and Companhia Energetica.
Diversification Opportunities for Engie SA and Companhia Energetica
0.32 | Correlation Coefficient |
Weak diversification
The 3 months correlation between Engie and Companhia is 0.32. Overlapping area represents the amount of risk that can be diversified away by holding Engie SA ADR and Companhia Energetica de in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Companhia Energetica and Engie SA 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 Engie SA ADR are associated (or correlated) with Companhia Energetica. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Companhia Energetica has no effect on the direction of Engie SA i.e., Engie SA and Companhia Energetica go up and down completely randomly.
Pair Corralation between Engie SA and Companhia Energetica
Assuming the 90 days horizon Engie SA ADR is expected to under-perform the Companhia Energetica. But the pink sheet apears to be less risky and, when comparing its historical volatility, Engie SA ADR is 2.43 times less risky than Companhia Energetica. The pink sheet trades about -0.25 of its potential returns per unit of risk. The Companhia Energetica de is currently generating about 0.03 of returns per unit of risk over similar time horizon. If you would invest 193.00 in Companhia Energetica de on September 1, 2024 and sell it today you would earn a total of 2.00 from holding Companhia Energetica de or generate 1.04% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Engie SA ADR vs. Companhia Energetica de
Performance |
| Timeline |
| Engie SA ADR |
| Companhia Energetica |
Engie SA and Companhia Energetica Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Engie SA and Companhia Energetica
The main advantage of trading using opposite Engie SA and Companhia Energetica positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Engie SA position performs unexpectedly, Companhia Energetica 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 Companhia Energetica will offset losses from the drop in Companhia Energetica's long position.| Engie SA vs. Nextera Energy | Engie SA vs. Consumers Energy | Engie SA vs. Duke Energy | Engie SA vs. Centrais Electricas Brasileiras |
| Companhia Energetica vs. NorthWestern | Companhia Energetica vs. Montauk Renewables | Companhia Energetica vs. Allete Inc | Companhia Energetica 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 Insider Screener module to find insiders across different sectors to evaluate their impact on performance.
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