Correlation Between REN Redes and Banco Comercial
Can any of the company-specific risk be diversified away by investing in both REN Redes and Banco Comercial 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 REN Redes and Banco Comercial into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between REN Redes and Banco Comercial Portugues, you can compare the effects of market volatilities on REN Redes and Banco Comercial 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 REN Redes with a short position of Banco Comercial. Check out your portfolio center. Please also check ongoing floating volatility patterns of REN Redes and Banco Comercial.
Diversification Opportunities for REN Redes and Banco Comercial
-0.43 | Correlation Coefficient |
Very good diversification
The 3 months correlation between REN and Banco is -0.43. Overlapping area represents the amount of risk that can be diversified away by holding REN Redes and Banco Comercial Portugues in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Banco Comercial Portugues and REN Redes 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 REN Redes are associated (or correlated) with Banco Comercial. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Banco Comercial Portugues has no effect on the direction of REN Redes i.e., REN Redes and Banco Comercial go up and down completely randomly.
Pair Corralation between REN Redes and Banco Comercial
Assuming the 90 days trading horizon REN Redes is expected to generate 13.82 times less return on investment than Banco Comercial. But when comparing it to its historical volatility, REN Redes is 3.3 times less risky than Banco Comercial. It trades about 0.02 of its potential returns per unit of risk. Banco Comercial Portugues is currently generating about 0.09 of returns per unit of risk over similar time horizon. If you would invest 17.00 in Banco Comercial Portugues on August 31, 2024 and sell it today you would earn a total of 28.00 from holding Banco Comercial Portugues or generate 164.71% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
REN Redes vs. Banco Comercial Portugues
Performance |
| Timeline |
| REN Redes |
| Banco Comercial Portugues |
REN Redes and Banco Comercial Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with REN Redes and Banco Comercial
The main advantage of trading using opposite REN Redes and Banco Comercial positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if REN Redes position performs unexpectedly, Banco Comercial 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 Banco Comercial will offset losses from the drop in Banco Comercial's long position.| REN Redes vs. Sonae SGPS SA | REN Redes vs. The Navigator | REN Redes vs. EDP Energias | REN Redes vs. NOS SGPS SA |
| Banco Comercial vs. Sonae SGPS SA | Banco Comercial vs. Galp Energia SGPS | Banco Comercial vs. EDP Energias | Banco Comercial vs. Altri SGPS 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 Theme Ratings module to determine theme ratings based on digital equity recommendations. Macroaxis theme ratings are based on combination of fundamental analysis and risk-adjusted market performance.
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