Correlation Between RWE AG and Pampa Energia
Can any of the company-specific risk be diversified away by investing in both RWE AG and Pampa 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 RWE AG and Pampa Energia into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between RWE AG PK and Pampa Energia SA, you can compare the effects of market volatilities on RWE AG and Pampa 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 RWE AG with a short position of Pampa Energia. Check out your portfolio center. Please also check ongoing floating volatility patterns of RWE AG and Pampa Energia.
Diversification Opportunities for RWE AG and Pampa Energia
-0.72 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between RWE and Pampa is -0.72. Overlapping area represents the amount of risk that can be diversified away by holding RWE AG PK and Pampa Energia SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Pampa Energia SA and RWE AG 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 RWE AG PK are associated (or correlated) with Pampa Energia. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Pampa Energia SA has no effect on the direction of RWE AG i.e., RWE AG and Pampa Energia go up and down completely randomly.
Pair Corralation between RWE AG and Pampa Energia
Assuming the 90 days horizon RWE AG PK is expected to under-perform the Pampa Energia. In addition to that, RWE AG is 1.05 times more volatile than Pampa Energia SA. It trades about -0.02 of its total potential returns per unit of risk. Pampa Energia SA is currently generating about 0.58 per unit of volatility. If you would invest 6,818 in Pampa Energia SA on August 25, 2024 and sell it today you would earn a total of 1,675 from holding Pampa Energia SA or generate 24.57% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
RWE AG PK vs. Pampa Energia SA
Performance |
| Timeline |
| RWE AG PK |
| Pampa Energia SA |
RWE AG and Pampa Energia Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with RWE AG and Pampa Energia
The main advantage of trading using opposite RWE AG and Pampa Energia positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if RWE AG position performs unexpectedly, Pampa 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 Pampa Energia will offset losses from the drop in Pampa Energia's long position.| RWE AG vs. TransAlta Corp | RWE AG vs. Pampa Energia SA | RWE AG vs. Vistra Energy Corp | RWE AG vs. NRG Energy |
| Pampa Energia vs. Grupo Financiero Galicia | Pampa Energia vs. Banco Macro SA | Pampa Energia vs. Empresa Distribuidora y | Pampa Energia vs. Transportadora de Gas |
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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