Correlation Between Newtek Business and Centrais Electricas
Can any of the company-specific risk be diversified away by investing in both Newtek Business 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 Newtek Business and Centrais Electricas into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Newtek Business Services and Centrais Electricas Brasileiras, you can compare the effects of market volatilities on Newtek Business 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 Newtek Business with a short position of Centrais Electricas. Check out your portfolio center. Please also check ongoing floating volatility patterns of Newtek Business and Centrais Electricas.
Diversification Opportunities for Newtek Business and Centrais Electricas
-0.93 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between Newtek and Centrais is -0.93. Overlapping area represents the amount of risk that can be diversified away by holding Newtek Business Services and Centrais Electricas Brasileira in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Centrais Electricas and Newtek Business 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 Newtek Business Services 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 Newtek Business i.e., Newtek Business and Centrais Electricas go up and down completely randomly.
Pair Corralation between Newtek Business and Centrais Electricas
Assuming the 90 days horizon Newtek Business Services is expected to generate 0.12 times more return on investment than Centrais Electricas. However, Newtek Business Services is 8.09 times less risky than Centrais Electricas. It trades about 0.15 of its potential returns per unit of risk. Centrais Electricas Brasileiras is currently generating about -0.03 per unit of risk. If you would invest 2,356 in Newtek Business Services on August 30, 2024 and sell it today you would earn a total of 124.00 from holding Newtek Business Services or generate 5.26% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Newtek Business Services vs. Centrais Electricas Brasileira
Performance |
| Timeline |
| Newtek Business Services |
| Centrais Electricas |
Newtek Business and Centrais Electricas Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Newtek Business and Centrais Electricas
The main advantage of trading using opposite Newtek Business and Centrais Electricas positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Newtek Business 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.The idea behind Newtek Business Services and Centrais Electricas Brasileiras pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.| Centrais Electricas vs. The Mosaic | Centrais Electricas vs. Luxfer Holdings PLC | Centrais Electricas vs. Pinterest | Centrais Electricas vs. Sensient Technologies |
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 Global Correlations module to find global opportunities by holding instruments from different markets.
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