Correlation Between Gafisa SA and Engie Brasil
Can any of the company-specific risk be diversified away by investing in both Gafisa SA and Engie Brasil 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 Gafisa SA and Engie Brasil into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Gafisa SA and Engie Brasil Energia, you can compare the effects of market volatilities on Gafisa SA and Engie Brasil 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 Gafisa SA with a short position of Engie Brasil. Check out your portfolio center. Please also check ongoing floating volatility patterns of Gafisa SA and Engie Brasil.
Diversification Opportunities for Gafisa SA and Engie Brasil
0.92 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between Gafisa and Engie is 0.92. Overlapping area represents the amount of risk that can be diversified away by holding Gafisa SA and Engie Brasil Energia in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Engie Brasil Energia and Gafisa 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 Gafisa SA are associated (or correlated) with Engie Brasil. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Engie Brasil Energia has no effect on the direction of Gafisa SA i.e., Gafisa SA and Engie Brasil go up and down completely randomly.
Pair Corralation between Gafisa SA and Engie Brasil
Assuming the 90 days trading horizon Gafisa SA is expected to under-perform the Engie Brasil. In addition to that, Gafisa SA is 4.26 times more volatile than Engie Brasil Energia. It trades about -0.1 of its total potential returns per unit of risk. Engie Brasil Energia is currently generating about -0.34 per unit of volatility. If you would invest 4,125 in Engie Brasil Energia on August 31, 2024 and sell it today you would lose (370.00) from holding Engie Brasil Energia or give up 8.97% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Gafisa SA vs. Engie Brasil Energia
Performance |
| Timeline |
| Gafisa SA |
| Engie Brasil Energia |
Gafisa SA and Engie Brasil Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Gafisa SA and Engie Brasil
The main advantage of trading using opposite Gafisa SA and Engie Brasil positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Gafisa SA position performs unexpectedly, Engie Brasil 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 Engie Brasil will offset losses from the drop in Engie Brasil's long position.| Gafisa SA vs. Engie Brasil Energia | Gafisa SA vs. Fras le SA | Gafisa SA vs. Energisa SA | Gafisa SA vs. Clave Indices De |
| Engie Brasil vs. WEG SA | Engie Brasil vs. Transmissora Aliana de | Engie Brasil vs. Fleury SA | Engie Brasil vs. BB Seguridade Participacoes |
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 Sectors module to list of equity sectors categorizing publicly traded companies based on their primary business activities.
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