Correlation Between Public Service and Engie Brasil
Can any of the company-specific risk be diversified away by investing in both Public Service 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 Public Service and Engie Brasil into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Public Service Enterprise and Engie Brasil Energia, you can compare the effects of market volatilities on Public Service 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 Public Service with a short position of Engie Brasil. Check out your portfolio center. Please also check ongoing floating volatility patterns of Public Service and Engie Brasil.
Diversification Opportunities for Public Service and Engie Brasil
-0.63 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Public and Engie is -0.63. Overlapping area represents the amount of risk that can be diversified away by holding Public Service Enterprise 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 Public Service 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 Public Service Enterprise 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 Public Service i.e., Public Service and Engie Brasil go up and down completely randomly.
Pair Corralation between Public Service and Engie Brasil
Considering the 90-day investment horizon Public Service Enterprise is expected to generate 0.71 times more return on investment than Engie Brasil. However, Public Service Enterprise is 1.41 times less risky than Engie Brasil. It trades about 0.05 of its potential returns per unit of risk. Engie Brasil Energia is currently generating about -0.14 per unit of risk. If you would invest 9,073 in Public Service Enterprise on August 24, 2024 and sell it today you would earn a total of 152.00 from holding Public Service Enterprise or generate 1.68% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Public Service Enterprise vs. Engie Brasil Energia
Performance |
| Timeline |
| Public Service Enterprise |
| Engie Brasil Energia |
Public Service and Engie Brasil Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Public Service and Engie Brasil
The main advantage of trading using opposite Public Service and Engie Brasil positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Public Service 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.| Public Service vs. Korea Electric Power | Public Service vs. Centrais Electricas Brasileiras | Public Service vs. MGE Energy | Public Service vs. IDACORP |
| 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 Volatility Analysis module to get historical volatility and risk analysis based on latest market data.
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