Correlation Between Equatorial Energia and Empresa Distribuidora
Can any of the company-specific risk be diversified away by investing in both Equatorial Energia and Empresa Distribuidora 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 Empresa Distribuidora 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 Empresa Distribuidora y, you can compare the effects of market volatilities on Equatorial Energia and Empresa Distribuidora 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 Empresa Distribuidora. Check out your portfolio center. Please also check ongoing floating volatility patterns of Equatorial Energia and Empresa Distribuidora.
Diversification Opportunities for Equatorial Energia and Empresa Distribuidora
-0.37 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Equatorial and Empresa is -0.37. Overlapping area represents the amount of risk that can be diversified away by holding Equatorial Energia SA and Empresa Distribuidora y in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Empresa Distribuidora 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 Empresa Distribuidora. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Empresa Distribuidora has no effect on the direction of Equatorial Energia i.e., Equatorial Energia and Empresa Distribuidora go up and down completely randomly.
Pair Corralation between Equatorial Energia and Empresa Distribuidora
Assuming the 90 days horizon Equatorial Energia SA is expected to generate 0.78 times more return on investment than Empresa Distribuidora. However, Equatorial Energia SA is 1.28 times less risky than Empresa Distribuidora. It trades about 0.33 of its potential returns per unit of risk. Empresa Distribuidora y is currently generating about -0.1 per unit of risk. If you would invest 415.00 in Equatorial Energia SA on November 5, 2024 and sell it today you would earn a total of 100.00 from holding Equatorial Energia SA or generate 24.1% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Equatorial Energia SA vs. Empresa Distribuidora y
Performance |
| Timeline |
| Equatorial Energia |
| Empresa Distribuidora |
Equatorial Energia and Empresa Distribuidora Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Equatorial Energia and Empresa Distribuidora
The main advantage of trading using opposite Equatorial Energia and Empresa Distribuidora positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Equatorial Energia position performs unexpectedly, Empresa Distribuidora 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 Distribuidora will offset losses from the drop in Empresa Distribuidora's long position.| Equatorial Energia vs. Dominion Energy | Equatorial Energia vs. Centrais Electricas Brasileiras | Equatorial Energia vs. Enel Chile SA | Equatorial Energia vs. Edison International |
| Empresa Distribuidora vs. Centrais Electricas Brasileiras | Empresa Distribuidora vs. Enel Chile SA | Empresa Distribuidora vs. Korea Electric Power | Empresa Distribuidora vs. Genie Energy |
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 Money Managers module to screen money managers from public funds and ETFs managed around the world.
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