Correlation Between Genie Energy and Red Electrica
Can any of the company-specific risk be diversified away by investing in both Genie Energy and Red Electrica 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 Genie Energy and Red Electrica into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Genie Energy and Red Electrica Corporacion, you can compare the effects of market volatilities on Genie Energy and Red Electrica 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 Genie Energy with a short position of Red Electrica. Check out your portfolio center. Please also check ongoing floating volatility patterns of Genie Energy and Red Electrica.
Diversification Opportunities for Genie Energy and Red Electrica
0.5 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Genie and Red is 0.5. Overlapping area represents the amount of risk that can be diversified away by holding Genie Energy and Red Electrica Corporacion in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Red Electrica Corporacion and Genie Energy 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 Genie Energy are associated (or correlated) with Red Electrica. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Red Electrica Corporacion has no effect on the direction of Genie Energy i.e., Genie Energy and Red Electrica go up and down completely randomly.
Pair Corralation between Genie Energy and Red Electrica
Considering the 90-day investment horizon Genie Energy is expected to under-perform the Red Electrica. In addition to that, Genie Energy is 1.46 times more volatile than Red Electrica Corporacion. It trades about -0.05 of its total potential returns per unit of risk. Red Electrica Corporacion is currently generating about -0.02 per unit of volatility. If you would invest 906.00 in Red Electrica Corporacion on August 29, 2024 and sell it today you would lose (9.00) from holding Red Electrica Corporacion or give up 0.99% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Genie Energy vs. Red Electrica Corporacion
Performance |
| Timeline |
| Genie Energy |
| Red Electrica Corporacion |
Genie Energy and Red Electrica Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Genie Energy and Red Electrica
The main advantage of trading using opposite Genie Energy and Red Electrica positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Genie Energy position performs unexpectedly, Red Electrica 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 Red Electrica will offset losses from the drop in Red Electrica's long position.| Genie Energy vs. Centrais Electricas Brasileiras | Genie Energy vs. Central Puerto SA | Genie Energy vs. Korea Electric Power | Genie Energy vs. Empresa Distribuidora y |
| Red Electrica vs. Centrais Eltricas Brasileiras | Red Electrica vs. Centrais Electricas Brasileiras | Red Electrica vs. Enel Chile SA | Red Electrica vs. Korea Electric Power |
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 Fundamentals Comparison module to compare fundamentals across multiple equities to find investing opportunities.
Other Complementary Tools
| Positions Ratings Determine portfolio positions ratings based on digital equity recommendations. Macroaxis instant position ratings are based on combination of fundamental analysis and risk-adjusted market performance | |
| Sectors List of equity sectors categorizing publicly traded companies based on their primary business activities | |
| Efficient Frontier Plot and analyze your portfolio and positions against risk-return landscape of the market. | |
| Alpha Finder Use alpha and beta coefficients to find investment opportunities after accounting for the risk | |
| Correlation Analysis Reduce portfolio risk simply by holding instruments which are not perfectly correlated |