Correlation Between Nextera Energy and Centrais Electricas
Can any of the company-specific risk be diversified away by investing in both Nextera Energy and Centrais Electricas 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 Nextera Energy and Centrais Electricas into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Nextera Energy and Centrais Electricas Brasileiras, you can compare the effects of market volatilities on Nextera Energy and Centrais Electricas 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 Nextera Energy with a short position of Centrais Electricas. Check out your portfolio center. Please also check ongoing floating volatility patterns of Nextera Energy and Centrais Electricas.
Diversification Opportunities for Nextera Energy and Centrais Electricas
0.51 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Nextera and Centrais is 0.51. Overlapping area represents the amount of risk that can be diversified away by holding Nextera Energy and Centrais Electricas Brasileira in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Centrais Electricas and Nextera 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 Nextera Energy are associated (or correlated) with Centrais Electricas. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Centrais Electricas has no effect on the direction of Nextera Energy i.e., Nextera Energy and Centrais Electricas go up and down completely randomly.
Pair Corralation between Nextera Energy and Centrais Electricas
Assuming the 90 days trading horizon Nextera Energy is expected to generate 1.79 times more return on investment than Centrais Electricas. However, Nextera Energy is 1.79 times more volatile than Centrais Electricas Brasileiras. It trades about -0.07 of its potential returns per unit of risk. Centrais Electricas Brasileiras is currently generating about -0.22 per unit of risk. If you would invest 4,628 in Nextera Energy on August 28, 2024 and sell it today you would lose (240.00) from holding Nextera Energy or give up 5.19% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Nextera Energy vs. Centrais Electricas Brasileira
Performance |
| Timeline |
| Nextera Energy |
| Centrais Electricas |
Nextera Energy and Centrais Electricas Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Nextera Energy and Centrais Electricas
The main advantage of trading using opposite Nextera Energy and Centrais Electricas positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Nextera Energy position performs unexpectedly, Centrais Electricas 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 Centrais Electricas will offset losses from the drop in Centrais Electricas' long position.| Nextera Energy vs. Sensient Technologies | Nextera Energy vs. Axalta Coating Systems | Nextera Energy vs. Balchem | Nextera Energy vs. Boston Omaha Corp |
| Centrais Electricas vs. Genie Energy | Centrais Electricas vs. Central Puerto SA | Centrais Electricas vs. Korea Electric Power | Centrais Electricas vs. Empresa Distribuidora y |
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 ETF Categories module to list of ETF categories grouped based on various criteria, such as the investment strategy or type of investments.
Other Complementary Tools
| Technical Analysis Check basic technical indicators and analysis based on most latest market data | |
| Risk-Return Analysis View associations between returns expected from investment and the risk you assume | |
| Bonds Directory Find actively traded corporate debentures issued by US companies | |
| AI Portfolio Architect Use AI to generate optimal portfolios and find profitable investment opportunities | |
| Money Managers Screen money managers from public funds and ETFs managed around the world |