Correlation Between Itau Total and Energisa
Can any of the company-specific risk be diversified away by investing in both Itau Total 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 Itau Total and Energisa into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Itau Total Return and Energisa SA, you can compare the effects of market volatilities on Itau Total 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 Itau Total with a short position of Energisa. Check out your portfolio center. Please also check ongoing floating volatility patterns of Itau Total and Energisa.
Diversification Opportunities for Itau Total and Energisa
0.88 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Itau and Energisa is 0.88. Overlapping area represents the amount of risk that can be diversified away by holding Itau Total Return and Energisa SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Energisa SA and Itau Total 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 Itau Total Return 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 Itau Total i.e., Itau Total and Energisa go up and down completely randomly.
Pair Corralation between Itau Total and Energisa
Assuming the 90 days trading horizon Itau Total Return is expected to generate 0.59 times more return on investment than Energisa. However, Itau Total Return is 1.69 times less risky than Energisa. It trades about -0.21 of its potential returns per unit of risk. Energisa SA is currently generating about -0.17 per unit of risk. If you would invest 8,970 in Itau Total Return on September 2, 2024 and sell it today you would lose (973.00) from holding Itau Total Return or give up 10.85% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Itau Total Return vs. Energisa SA
Performance |
| Timeline |
| Itau Total Return |
| Energisa SA |
Itau Total and Energisa Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Itau Total and Energisa
The main advantage of trading using opposite Itau Total and Energisa positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Itau Total 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.| Itau Total vs. Real Estate Investment | Itau Total vs. NAVI CRDITO IMOBILIRIO | Itau Total vs. LIFE CAPITAL PARTNERS | Itau Total vs. Cshg Jhsf Prime |
| 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 Pattern Recognition module to use different Pattern Recognition models to time the market across multiple global exchanges.
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