Correlation Between EVN AG and C PARAN
Can any of the company-specific risk be diversified away by investing in both EVN AG and C PARAN 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 EVN AG and C PARAN into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between EVN AG and C PARAN EN, you can compare the effects of market volatilities on EVN AG and C PARAN 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 EVN AG with a short position of C PARAN. Check out your portfolio center. Please also check ongoing floating volatility patterns of EVN AG and C PARAN.
Diversification Opportunities for EVN AG and C PARAN
Very poor diversification
The 3 months correlation between EVN and ELP1 is 0.85. Overlapping area represents the amount of risk that can be diversified away by holding EVN AG and C PARAN EN in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on C PARAN EN and EVN AG 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 EVN AG are associated (or correlated) with C PARAN. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of C PARAN EN has no effect on the direction of EVN AG i.e., EVN AG and C PARAN go up and down completely randomly.
Pair Corralation between EVN AG and C PARAN
Assuming the 90 days horizon EVN AG is expected to generate 0.7 times more return on investment than C PARAN. However, EVN AG is 1.42 times less risky than C PARAN. It trades about 0.06 of its potential returns per unit of risk. C PARAN EN is currently generating about 0.04 per unit of risk. If you would invest 1,739 in EVN AG on September 4, 2024 and sell it today you would earn a total of 701.00 from holding EVN AG or generate 40.31% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 99.8% |
| Values | Daily Returns |
EVN AG vs. C PARAN EN
Performance |
| Timeline |
| EVN AG |
| C PARAN EN |
EVN AG and C PARAN Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with EVN AG and C PARAN
The main advantage of trading using opposite EVN AG and C PARAN positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if EVN AG position performs unexpectedly, C PARAN 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 C PARAN will offset losses from the drop in C PARAN's long position.| EVN AG vs. IBERDROLA ADR1 EO | EVN AG vs. SSE PLC ADR | EVN AG vs. CIA ENGER ADR | EVN AG vs. Companhia Energtica de |
| C PARAN vs. IBERDROLA ADR1 EO | C PARAN vs. SSE PLC ADR | C PARAN vs. CIA ENGER ADR | C PARAN vs. Companhia Energtica 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 Alpha Finder module to use alpha and beta coefficients to find investment opportunities after accounting for the risk.
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