Correlation Between Navigator and EDP Energias
Can any of the company-specific risk be diversified away by investing in both Navigator and EDP Energias 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 Navigator and EDP Energias into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between The Navigator and EDP Energias, you can compare the effects of market volatilities on Navigator and EDP Energias 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 Navigator with a short position of EDP Energias. Check out your portfolio center. Please also check ongoing floating volatility patterns of Navigator and EDP Energias.
Diversification Opportunities for Navigator and EDP Energias
-0.48 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Navigator and EDP is -0.48. Overlapping area represents the amount of risk that can be diversified away by holding The Navigator and EDP Energias in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on EDP Energias and Navigator 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 The Navigator are associated (or correlated) with EDP Energias. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of EDP Energias has no effect on the direction of Navigator i.e., Navigator and EDP Energias go up and down completely randomly.
Pair Corralation between Navigator and EDP Energias
Assuming the 90 days trading horizon The Navigator is expected to generate 0.61 times more return on investment than EDP Energias. However, The Navigator is 1.63 times less risky than EDP Energias. It trades about -0.02 of its potential returns per unit of risk. EDP Energias is currently generating about -0.08 per unit of risk. If you would invest 333.00 in The Navigator on November 27, 2024 and sell it today you would lose (4.00) from holding The Navigator or give up 1.2% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
The Navigator vs. EDP Energias
Performance |
| Timeline |
| Navigator |
| EDP Energias |
Navigator and EDP Energias Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Navigator and EDP Energias
The main advantage of trading using opposite Navigator and EDP Energias positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Navigator position performs unexpectedly, EDP Energias 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 EDP Energias will offset losses from the drop in EDP Energias' long position.| Navigator vs. Altri SGPS SA | Navigator vs. Sonae SGPS SA | Navigator vs. NOS SGPS SA | Navigator vs. REN Redes |
| EDP Energias vs. EDP Renovaveis | EDP Energias vs. Galp Energia SGPS | EDP Energias vs. Sonae SGPS SA | EDP Energias vs. Banco Comercial Portugues |
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 Bollinger Bands module to use Bollinger Bands indicator to analyze target price for a given investing horizon.
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