Correlation Between FirstEnergy and Companhia Paranaense
Can any of the company-specific risk be diversified away by investing in both FirstEnergy and Companhia Paranaense 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 FirstEnergy and Companhia Paranaense into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between FirstEnergy and Companhia Paranaense de, you can compare the effects of market volatilities on FirstEnergy and Companhia Paranaense 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 FirstEnergy with a short position of Companhia Paranaense. Check out your portfolio center. Please also check ongoing floating volatility patterns of FirstEnergy and Companhia Paranaense.
Diversification Opportunities for FirstEnergy and Companhia Paranaense
0.73 | Correlation Coefficient |
Poor diversification
The 3 months correlation between FirstEnergy and Companhia is 0.73. Overlapping area represents the amount of risk that can be diversified away by holding FirstEnergy and Companhia Paranaense de in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Companhia Paranaense and FirstEnergy 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 FirstEnergy are associated (or correlated) with Companhia Paranaense. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Companhia Paranaense has no effect on the direction of FirstEnergy i.e., FirstEnergy and Companhia Paranaense go up and down completely randomly.
Pair Corralation between FirstEnergy and Companhia Paranaense
Allowing for the 90-day total investment horizon FirstEnergy is expected to generate 0.31 times more return on investment than Companhia Paranaense. However, FirstEnergy is 3.27 times less risky than Companhia Paranaense. It trades about 0.03 of its potential returns per unit of risk. Companhia Paranaense de is currently generating about -0.04 per unit of risk. If you would invest 4,239 in FirstEnergy on August 30, 2024 and sell it today you would earn a total of 23.00 from holding FirstEnergy or generate 0.54% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
FirstEnergy vs. Companhia Paranaense de
Performance |
| Timeline |
| FirstEnergy |
| Companhia Paranaense |
FirstEnergy and Companhia Paranaense Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with FirstEnergy and Companhia Paranaense
The main advantage of trading using opposite FirstEnergy and Companhia Paranaense positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if FirstEnergy position performs unexpectedly, Companhia Paranaense 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 Paranaense will offset losses from the drop in Companhia Paranaense's long position.| FirstEnergy vs. DTE Energy | FirstEnergy vs. Ameren Corp | FirstEnergy vs. CenterPoint Energy | FirstEnergy vs. Pinnacle West Capital |
| Companhia Paranaense vs. Encore Capital Group | Companhia Paranaense vs. Chemours Co | Companhia Paranaense vs. Siriuspoint | Companhia Paranaense vs. Freedom Bank of |
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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