Correlation Between PGE Corp and Engie Brasil
Can any of the company-specific risk be diversified away by investing in both PGE Corp and Engie Brasil 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 PGE Corp and Engie Brasil into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between PGE Corp and Engie Brasil Energia, you can compare the effects of market volatilities on PGE Corp and Engie Brasil 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 PGE Corp with a short position of Engie Brasil. Check out your portfolio center. Please also check ongoing floating volatility patterns of PGE Corp and Engie Brasil.
Diversification Opportunities for PGE Corp and Engie Brasil
-0.81 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between PGE and Engie is -0.81. Overlapping area represents the amount of risk that can be diversified away by holding PGE Corp and Engie Brasil Energia in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Engie Brasil Energia and PGE Corp 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 PGE Corp are associated (or correlated) with Engie Brasil. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Engie Brasil Energia has no effect on the direction of PGE Corp i.e., PGE Corp and Engie Brasil go up and down completely randomly.
Pair Corralation between PGE Corp and Engie Brasil
Considering the 90-day investment horizon PGE Corp is expected to generate 0.48 times more return on investment than Engie Brasil. However, PGE Corp is 2.1 times less risky than Engie Brasil. It trades about 0.06 of its potential returns per unit of risk. Engie Brasil Energia is currently generating about 0.01 per unit of risk. If you would invest 1,529 in PGE Corp on August 24, 2024 and sell it today you would earn a total of 608.00 from holding PGE Corp or generate 39.76% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
PGE Corp vs. Engie Brasil Energia
Performance |
| Timeline |
| PGE Corp |
| Engie Brasil Energia |
PGE Corp and Engie Brasil Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with PGE Corp and Engie Brasil
The main advantage of trading using opposite PGE Corp and Engie Brasil positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if PGE Corp position performs unexpectedly, Engie Brasil 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 Engie Brasil will offset losses from the drop in Engie Brasil's long position.| PGE Corp vs. Consolidated Edison | PGE Corp vs. Southern Company | PGE Corp vs. Entergy | PGE Corp vs. Pinnacle West Capital |
| Engie Brasil vs. Red Electrica Corporacion | Engie Brasil vs. Centrais Eltricas Brasileiras | Engie Brasil vs. Centrais Electricas Brasileiras | Engie Brasil vs. Enel Chile SA |
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 Latest Portfolios module to quick portfolio dashboard that showcases your latest portfolios.
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