Correlation Between TRX Renda and Energisa
Can any of the company-specific risk be diversified away by investing in both TRX Renda and Energisa 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 TRX Renda and Energisa into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between TRX Renda Fundo and Energisa SA, you can compare the effects of market volatilities on TRX Renda and Energisa 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 TRX Renda with a short position of Energisa. Check out your portfolio center. Please also check ongoing floating volatility patterns of TRX Renda and Energisa.
Diversification Opportunities for TRX Renda and Energisa
Very poor diversification
The 3 months correlation between TRX and Energisa is 0.84. Overlapping area represents the amount of risk that can be diversified away by holding TRX Renda Fundo and Energisa SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Energisa SA and TRX Renda 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 TRX Renda Fundo are associated (or correlated) with Energisa. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Energisa SA has no effect on the direction of TRX Renda i.e., TRX Renda and Energisa go up and down completely randomly.
Pair Corralation between TRX Renda and Energisa
Assuming the 90 days trading horizon TRX Renda Fundo is expected to generate 0.2 times more return on investment than Energisa. However, TRX Renda Fundo is 5.03 times less risky than Energisa. It trades about 0.52 of its potential returns per unit of risk. Energisa SA is currently generating about -0.04 per unit of risk. If you would invest 9,923 in TRX Renda Fundo on August 30, 2024 and sell it today you would earn a total of 410.00 from holding TRX Renda Fundo or generate 4.13% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
TRX Renda Fundo vs. Energisa SA
Performance |
| Timeline |
| TRX Renda Fundo |
| Energisa SA |
TRX Renda and Energisa Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with TRX Renda and Energisa
The main advantage of trading using opposite TRX Renda and Energisa positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if TRX Renda position performs unexpectedly, Energisa 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 Energisa will offset losses from the drop in Energisa's long position.| TRX Renda vs. Energisa SA | TRX Renda vs. BTG Pactual Logstica | TRX Renda vs. Plano Plano Desenvolvimento | TRX Renda vs. The Procter Gamble |
| Energisa vs. Equatorial Energia SA | Energisa vs. CPFL Energia SA | Energisa vs. Eneva SA | Energisa vs. Companhia de Saneamento |
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 Sectors module to list of equity sectors categorizing publicly traded companies based on their primary business activities.
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