Correlation Between TransAlta Corp and Pampa Energia
Can any of the company-specific risk be diversified away by investing in both TransAlta Corp 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 TransAlta Corp and Pampa Energia into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between TransAlta Corp and Pampa Energia SA, you can compare the effects of market volatilities on TransAlta Corp 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 TransAlta Corp with a short position of Pampa Energia. Check out your portfolio center. Please also check ongoing floating volatility patterns of TransAlta Corp and Pampa Energia.
Diversification Opportunities for TransAlta Corp and Pampa Energia
0.7 | Correlation Coefficient |
Poor diversification
The 3 months correlation between TransAlta and Pampa is 0.7. Overlapping area represents the amount of risk that can be diversified away by holding TransAlta Corp 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 TransAlta 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 TransAlta Corp 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 TransAlta Corp i.e., TransAlta Corp and Pampa Energia go up and down completely randomly.
Pair Corralation between TransAlta Corp and Pampa Energia
Considering the 90-day investment horizon TransAlta Corp is expected to generate 3.99 times less return on investment than Pampa Energia. In addition to that, TransAlta Corp is 1.83 times more volatile than Pampa Energia SA. It trades about 0.1 of its total potential returns per unit of risk. Pampa Energia SA is currently generating about 0.7 per unit of volatility. If you would invest 6,700 in Pampa Energia SA on August 27, 2024 and sell it today you would earn a total of 1,793 from holding Pampa Energia SA or generate 26.76% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
TransAlta Corp vs. Pampa Energia SA
Performance |
| Timeline |
| TransAlta Corp |
| Pampa Energia SA |
TransAlta Corp and Pampa Energia Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with TransAlta Corp and Pampa Energia
The main advantage of trading using opposite TransAlta Corp and Pampa Energia positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if TransAlta Corp 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.| TransAlta Corp vs. Pampa Energia SA | TransAlta Corp vs. Vistra Energy Corp | TransAlta Corp vs. NRG Energy | TransAlta Corp vs. Power Assets Holdings |
| 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 Alpha Finder module to use alpha and beta coefficients to find investment opportunities after accounting for the risk.
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