Correlation Between Basic Materials and Engie Brasil
Can any of the company-specific risk be diversified away by investing in both Basic Materials 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 Basic Materials and Engie Brasil into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Basic Materials and Engie Brasil Energia, you can compare the effects of market volatilities on Basic Materials 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 Basic Materials with a short position of Engie Brasil. Check out your portfolio center. Please also check ongoing floating volatility patterns of Basic Materials and Engie Brasil.
Diversification Opportunities for Basic Materials and Engie Brasil
-0.41 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Basic and Engie is -0.41. Overlapping area represents the amount of risk that can be diversified away by holding Basic Materials 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 Basic Materials 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 Basic Materials 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 Basic Materials i.e., Basic Materials and Engie Brasil go up and down completely randomly.
Pair Corralation between Basic Materials and Engie Brasil
Assuming the 90 days trading horizon Basic Materials is expected to generate 0.89 times more return on investment than Engie Brasil. However, Basic Materials is 1.12 times less risky than Engie Brasil. It trades about 0.09 of its potential returns per unit of risk. Engie Brasil Energia is currently generating about -0.29 per unit of risk. If you would invest 558,090 in Basic Materials on August 24, 2024 and sell it today you would earn a total of 10,826 from holding Basic Materials or generate 1.94% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 95.45% |
| Values | Daily Returns |
Basic Materials vs. Engie Brasil Energia
Performance |
| Timeline |
Basic Materials and Engie Brasil Volatility Contrast
Predicted Return Density |
| Returns |
Basic Materials
Pair trading matchups for Basic Materials
Engie Brasil Energia
Pair trading matchups for Engie Brasil
Pair Trading with Basic Materials and Engie Brasil
The main advantage of trading using opposite Basic Materials and Engie Brasil positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Basic Materials 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.| Basic Materials vs. Ross Stores | Basic Materials vs. Autohome | Basic Materials vs. Zoom Video Communications | Basic Materials vs. Metalrgica Riosulense SA |
| 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 Funds Screener module to find actively-traded funds from around the world traded on over 30 global exchanges.
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