Correlation Between Loft II and Energisa
Can any of the company-specific risk be diversified away by investing in both Loft 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 Loft II and Energisa into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Loft II Fundo and Energisa SA, you can compare the effects of market volatilities on Loft 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 Loft II with a short position of Energisa. Check out your portfolio center. Please also check ongoing floating volatility patterns of Loft II and Energisa.
Diversification Opportunities for Loft II and Energisa
Very poor diversification
The 3 months correlation between Loft and Energisa is 0.84. Overlapping area represents the amount of risk that can be diversified away by holding Loft II Fundo and Energisa SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Energisa SA and Loft 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 Loft II Fundo 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 Loft II i.e., Loft II and Energisa go up and down completely randomly.
Pair Corralation between Loft II and Energisa
Assuming the 90 days trading horizon Loft II Fundo is expected to generate 3.06 times more return on investment than Energisa. However, Loft II is 3.06 times more volatile than Energisa SA. It trades about 0.07 of its potential returns per unit of risk. Energisa SA is currently generating about -0.09 per unit of risk. If you would invest 898.00 in Loft II Fundo on August 24, 2024 and sell it today you would earn a total of 41.00 from holding Loft II Fundo or generate 4.57% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Together |
Strength | Strong |
Accuracy | 100.0% |
Values | Daily Returns |
Loft II Fundo vs. Energisa SA
Performance |
Timeline |
Loft II Fundo |
Energisa SA |
Loft II and Energisa Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Loft II and Energisa
The main advantage of trading using opposite Loft II and Energisa positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Loft 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.Loft II vs. Real Estate Investment | Loft II vs. NAVI CRDITO IMOBILIRIO | Loft II vs. LIFE CAPITAL PARTNERS | Loft II vs. Cshg Jhsf Prime |
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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 Equity Search module to search for actively traded equities including funds and ETFs from over 30 global markets.
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