Correlation Between US Wind and Centrais Electricas
Can any of the company-specific risk be diversified away by investing in both US Wind and Centrais Electricas 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 US Wind and Centrais Electricas into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between US Wind Farming and Centrais Electricas Brasileiras, you can compare the effects of market volatilities on US Wind and Centrais Electricas 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 US Wind with a short position of Centrais Electricas. Check out your portfolio center. Please also check ongoing floating volatility patterns of US Wind and Centrais Electricas.
Diversification Opportunities for US Wind and Centrais Electricas
0.0 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between USWF and Centrais is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding US Wind Farming and Centrais Electricas Brasileira in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Centrais Electricas and US Wind 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 US Wind Farming are associated (or correlated) with Centrais Electricas. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Centrais Electricas has no effect on the direction of US Wind i.e., US Wind and Centrais Electricas go up and down completely randomly.
Pair Corralation between US Wind and Centrais Electricas
Given the investment horizon of 90 days US Wind Farming is expected to under-perform the Centrais Electricas. In addition to that, US Wind is 1.28 times more volatile than Centrais Electricas Brasileiras. It trades about -0.05 of its total potential returns per unit of risk. Centrais Electricas Brasileiras is currently generating about -0.03 per unit of volatility. If you would invest 760.00 in Centrais Electricas Brasileiras on August 31, 2024 and sell it today you would lose (189.00) from holding Centrais Electricas Brasileiras or give up 24.87% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Flat |
| Strength | Insignificant |
| Accuracy | 99.73% |
| Values | Daily Returns |
US Wind Farming vs. Centrais Electricas Brasileira
Performance |
| Timeline |
| US Wind Farming |
| Centrais Electricas |
US Wind and Centrais Electricas Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with US Wind and Centrais Electricas
The main advantage of trading using opposite US Wind and Centrais Electricas positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if US Wind position performs unexpectedly, Centrais Electricas 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 Centrais Electricas will offset losses from the drop in Centrais Electricas' long position.| US Wind vs. Southern Company | US Wind vs. Duke Energy | US Wind vs. Duke Energy | US Wind vs. National Grid PLC |
| Centrais Electricas vs. Genie Energy | Centrais Electricas vs. Central Puerto SA | Centrais Electricas vs. Korea Electric Power | Centrais Electricas vs. Empresa Distribuidora y |
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 Crypto Correlations module to use cryptocurrency correlation module to diversify your cryptocurrency portfolio across multiple coins.
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