Correlation Between Niagara Mohawk and Centrais Electricas
Can any of the company-specific risk be diversified away by investing in both Niagara Mohawk 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 Niagara Mohawk and Centrais Electricas into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Niagara Mohawk Power and Centrais Electricas Brasileiras, you can compare the effects of market volatilities on Niagara Mohawk 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 Niagara Mohawk with a short position of Centrais Electricas. Check out your portfolio center. Please also check ongoing floating volatility patterns of Niagara Mohawk and Centrais Electricas.
Diversification Opportunities for Niagara Mohawk and Centrais Electricas
-0.68 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Niagara and Centrais is -0.68. Overlapping area represents the amount of risk that can be diversified away by holding Niagara Mohawk Power and Centrais Electricas Brasileira in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Centrais Electricas and Niagara Mohawk 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 Niagara Mohawk Power 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 Niagara Mohawk i.e., Niagara Mohawk and Centrais Electricas go up and down completely randomly.
Pair Corralation between Niagara Mohawk and Centrais Electricas
Assuming the 90 days horizon Niagara Mohawk Power is expected to generate 0.59 times more return on investment than Centrais Electricas. However, Niagara Mohawk Power is 1.7 times less risky than Centrais Electricas. It trades about 0.08 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 5,542 in Niagara Mohawk Power on August 30, 2024 and sell it today you would earn a total of 658.00 from holding Niagara Mohawk Power or generate 11.87% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 96.83% |
| Values | Daily Returns |
Niagara Mohawk Power vs. Centrais Electricas Brasileira
Performance |
| Timeline |
| Niagara Mohawk Power |
| Centrais Electricas |
Niagara Mohawk and Centrais Electricas Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Niagara Mohawk and Centrais Electricas
The main advantage of trading using opposite Niagara Mohawk and Centrais Electricas positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Niagara Mohawk 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.| Niagara Mohawk vs. Pintec Technology Holdings | Niagara Mohawk vs. Exchange Bankshares | Niagara Mohawk vs. Barings BDC | Niagara Mohawk vs. Artisan Partners Asset |
| 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 Piotroski F Score module to get Piotroski F Score based on the binary analysis strategy of nine different fundamentals.
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