Correlation Between Plano Plano and CPFL Energia
Can any of the company-specific risk be diversified away by investing in both Plano Plano and CPFL Energia 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 Plano Plano and CPFL Energia into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Plano Plano Desenvolvimento and CPFL Energia SA, you can compare the effects of market volatilities on Plano Plano and CPFL Energia 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 Plano Plano with a short position of CPFL Energia. Check out your portfolio center. Please also check ongoing floating volatility patterns of Plano Plano and CPFL Energia.
Diversification Opportunities for Plano Plano and CPFL Energia
-0.59 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Plano and CPFL is -0.59. Overlapping area represents the amount of risk that can be diversified away by holding Plano Plano Desenvolvimento and CPFL Energia SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on CPFL Energia SA and Plano Plano 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 Plano Plano Desenvolvimento are associated (or correlated) with CPFL Energia. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of CPFL Energia SA has no effect on the direction of Plano Plano i.e., Plano Plano and CPFL Energia go up and down completely randomly.
Pair Corralation between Plano Plano and CPFL Energia
Assuming the 90 days trading horizon Plano Plano Desenvolvimento is expected to under-perform the CPFL Energia. In addition to that, Plano Plano is 2.15 times more volatile than CPFL Energia SA. It trades about -0.06 of its total potential returns per unit of risk. CPFL Energia SA is currently generating about 0.01 per unit of volatility. If you would invest 3,293 in CPFL Energia SA on August 27, 2024 and sell it today you would earn a total of 5.00 from holding CPFL Energia SA or generate 0.15% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Plano Plano Desenvolvimento vs. CPFL Energia SA
Performance |
| Timeline |
| Plano Plano Desenvol |
| CPFL Energia SA |
Plano Plano and CPFL Energia Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Plano Plano and CPFL Energia
The main advantage of trading using opposite Plano Plano and CPFL Energia positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Plano Plano position performs unexpectedly, CPFL Energia 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 CPFL Energia will offset losses from the drop in CPFL Energia's long position.| Plano Plano vs. Waste Management | Plano Plano vs. Monster Beverage | Plano Plano vs. New Oriental Education | Plano Plano vs. CM Hospitalar SA |
| CPFL Energia vs. BB Seguridade Participacoes | CPFL Energia vs. Engie Brasil Energia | CPFL Energia vs. CTEEP Companhia | CPFL Energia 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 Global Markets Map module to get a quick overview of global market snapshot using zoomable world map. Drill down to check world indexes.
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