Correlation Between Habitat Ii and Energisa
Can any of the company-specific risk be diversified away by investing in both Habitat Ii and Energisa 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 Habitat Ii and Energisa into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Habitat Ii and Energisa SA, you can compare the effects of market volatilities on Habitat Ii and Energisa 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 Habitat Ii with a short position of Energisa. Check out your portfolio center. Please also check ongoing floating volatility patterns of Habitat Ii and Energisa.
Diversification Opportunities for Habitat Ii and Energisa
0.92 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between Habitat and Energisa is 0.92. Overlapping area represents the amount of risk that can be diversified away by holding Habitat Ii and Energisa SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Energisa SA and Habitat Ii 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 Habitat Ii are associated (or correlated) with Energisa. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Energisa SA has no effect on the direction of Habitat Ii i.e., Habitat Ii and Energisa go up and down completely randomly.
Pair Corralation between Habitat Ii and Energisa
Assuming the 90 days trading horizon Habitat Ii is expected to under-perform the Energisa. But the fund apears to be less risky and, when comparing its historical volatility, Habitat Ii is 2.14 times less risky than Energisa. The fund trades about -0.37 of its potential returns per unit of risk. The Energisa SA is currently generating about -0.04 of returns per unit of risk over similar time horizon. If you would invest 4,258 in Energisa SA on August 30, 2024 and sell it today you would lose (86.00) from holding Energisa SA or give up 2.02% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Habitat Ii vs. Energisa SA
Performance |
| Timeline |
| Habitat Ii |
| Energisa SA |
Habitat Ii and Energisa Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Habitat Ii and Energisa
The main advantage of trading using opposite Habitat Ii and Energisa positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Habitat Ii position performs unexpectedly, Energisa 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 Energisa will offset losses from the drop in Energisa's long position.| Habitat Ii vs. Energisa SA | Habitat Ii vs. BTG Pactual Logstica | Habitat Ii vs. Plano Plano Desenvolvimento | Habitat Ii vs. Companhia Habitasul de |
| Energisa vs. Equatorial Energia SA | Energisa vs. CPFL Energia SA | Energisa vs. Eneva SA | Energisa vs. Companhia de Saneamento |
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 Price Transformation module to use Price Transformation models to analyze the depth of different equity instruments across global markets.
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