Correlation Between Union Electric and Engie Brasil
Can any of the company-specific risk be diversified away by investing in both Union Electric and Engie Brasil 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 Union Electric and Engie Brasil into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Union Electric and Engie Brasil Energia, you can compare the effects of market volatilities on Union Electric and Engie Brasil 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 Union Electric with a short position of Engie Brasil. Check out your portfolio center. Please also check ongoing floating volatility patterns of Union Electric and Engie Brasil.
Diversification Opportunities for Union Electric and Engie Brasil
0.23 | Correlation Coefficient |
Modest diversification
The 3 months correlation between Union and Engie is 0.23. Overlapping area represents the amount of risk that can be diversified away by holding Union Electric and Engie Brasil Energia in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Engie Brasil Energia and Union Electric 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 Union Electric are associated (or correlated) with Engie Brasil. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Engie Brasil Energia has no effect on the direction of Union Electric i.e., Union Electric and Engie Brasil go up and down completely randomly.
Pair Corralation between Union Electric and Engie Brasil
Assuming the 90 days horizon Union Electric is expected to under-perform the Engie Brasil. In addition to that, Union Electric is 1.3 times more volatile than Engie Brasil Energia. It trades about -0.35 of its total potential returns per unit of risk. Engie Brasil Energia is currently generating about -0.07 per unit of volatility. If you would invest 609.00 in Engie Brasil Energia on October 9, 2024 and sell it today you would lose (25.00) from holding Engie Brasil Energia or give up 4.11% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Union Electric vs. Engie Brasil Energia
Performance |
| Timeline |
| Union Electric |
| Engie Brasil Energia |
Union Electric and Engie Brasil Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Union Electric and Engie Brasil
The main advantage of trading using opposite Union Electric and Engie Brasil positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Union Electric position performs unexpectedly, Engie Brasil 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 Engie Brasil will offset losses from the drop in Engie Brasil's long position.| Union Electric vs. Engie Brasil Energia | Union Electric vs. Centrais Eltricas Brasileiras | Union Electric vs. Centrais Electricas Brasileiras | Union Electric vs. Ameren Corp |
| Engie Brasil vs. Red Electrica Corporacion | Engie Brasil vs. Centrais Eltricas Brasileiras | Engie Brasil vs. Centrais Electricas Brasileiras | Engie Brasil vs. Enel Chile 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 Portfolio Analyzer module to portfolio analysis module that provides access to portfolio diagnostics and optimization engine.
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