Correlation Between Equatorial Energia and Eneva SA
Can any of the company-specific risk be diversified away by investing in both Equatorial Energia and Eneva SA 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 Equatorial Energia and Eneva SA into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Equatorial Energia SA and Eneva SA, you can compare the effects of market volatilities on Equatorial Energia and Eneva SA 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 Equatorial Energia with a short position of Eneva SA. Check out your portfolio center. Please also check ongoing floating volatility patterns of Equatorial Energia and Eneva SA.
Diversification Opportunities for Equatorial Energia and Eneva SA
0.32 | Correlation Coefficient |
Weak diversification
The 3 months correlation between Equatorial and Eneva is 0.32. Overlapping area represents the amount of risk that can be diversified away by holding Equatorial Energia SA and Eneva SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Eneva SA and Equatorial Energia 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 Equatorial Energia SA are associated (or correlated) with Eneva SA. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Eneva SA has no effect on the direction of Equatorial Energia i.e., Equatorial Energia and Eneva SA go up and down completely randomly.
Pair Corralation between Equatorial Energia and Eneva SA
Assuming the 90 days trading horizon Equatorial Energia SA is expected to generate 1.21 times more return on investment than Eneva SA. However, Equatorial Energia is 1.21 times more volatile than Eneva SA. It trades about 0.06 of its potential returns per unit of risk. Eneva SA is currently generating about -0.59 per unit of risk. If you would invest 3,196 in Equatorial Energia SA on August 24, 2024 and sell it today you would earn a total of 54.00 from holding Equatorial Energia SA or generate 1.69% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Equatorial Energia SA vs. Eneva SA
Performance |
| Timeline |
| Equatorial Energia |
| Eneva SA |
Equatorial Energia and Eneva SA Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Equatorial Energia and Eneva SA
The main advantage of trading using opposite Equatorial Energia and Eneva SA positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Equatorial Energia position performs unexpectedly, Eneva SA 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 Eneva SA will offset losses from the drop in Eneva SA's long position.| Equatorial Energia vs. WEG SA | Equatorial Energia vs. Automatic Data Processing | Equatorial Energia vs. Atom Empreendimentos e | Equatorial Energia vs. Neurocrine Biosciences |
| Eneva SA vs. Banco BTG Pactual | Eneva SA vs. Cosan SA | Eneva SA vs. Banco Pan SA | Eneva SA vs. Equatorial Energia SA |
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 Theme Ratings module to determine theme ratings based on digital equity recommendations. Macroaxis theme ratings are based on combination of fundamental analysis and risk-adjusted market performance.
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