Correlation Between NextEra Energy and Transmissora Aliana
Can any of the company-specific risk be diversified away by investing in both NextEra Energy and Transmissora Aliana 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 Transmissora Aliana into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between NextEra Energy and Transmissora Aliana de, you can compare the effects of market volatilities on NextEra Energy and Transmissora Aliana 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 Transmissora Aliana. Check out your portfolio center. Please also check ongoing floating volatility patterns of NextEra Energy and Transmissora Aliana.
Diversification Opportunities for NextEra Energy and Transmissora Aliana
0.07 | Correlation Coefficient |
Significant diversification
The 3 months correlation between NextEra and Transmissora is 0.07. Overlapping area represents the amount of risk that can be diversified away by holding NextEra Energy and Transmissora Aliana de in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Transmissora Aliana 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 Transmissora Aliana. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Transmissora Aliana has no effect on the direction of NextEra Energy i.e., NextEra Energy and Transmissora Aliana go up and down completely randomly.
Pair Corralation between NextEra Energy and Transmissora Aliana
Assuming the 90 days trading horizon NextEra Energy is expected to generate 1.98 times more return on investment than Transmissora Aliana. However, NextEra Energy is 1.98 times more volatile than Transmissora Aliana de. It trades about 0.02 of its potential returns per unit of risk. Transmissora Aliana de is currently generating about 0.01 per unit of risk. If you would invest 11,009 in NextEra Energy on September 2, 2024 and sell it today you would earn a total of 827.00 from holding NextEra Energy or generate 7.51% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 99.6% |
| Values | Daily Returns |
NextEra Energy vs. Transmissora Aliana de
Performance |
| Timeline |
| NextEra Energy |
| Transmissora Aliana |
NextEra Energy and Transmissora Aliana Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with NextEra Energy and Transmissora Aliana
The main advantage of trading using opposite NextEra Energy and Transmissora Aliana positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if NextEra Energy position performs unexpectedly, Transmissora Aliana 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 Transmissora Aliana will offset losses from the drop in Transmissora Aliana's long position.| NextEra Energy vs. Verizon Communications | NextEra Energy vs. Tres Tentos Agroindustrial | NextEra Energy vs. Bemobi Mobile Tech | NextEra Energy vs. Unity Software |
| Transmissora Aliana vs. BB Seguridade Participacoes | Transmissora Aliana vs. Engie Brasil Energia | Transmissora Aliana vs. CTEEP Companhia | Transmissora Aliana vs. Itasa Investimentos |
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 Sectors module to list of equity sectors categorizing publicly traded companies based on their primary business activities.
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