Correlation Between Eco Wave and Centrais Electricas
Can any of the company-specific risk be diversified away by investing in both Eco Wave 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 Eco Wave and Centrais Electricas into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Eco Wave Power and Centrais Electricas Brasileiras, you can compare the effects of market volatilities on Eco Wave 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 Eco Wave with a short position of Centrais Electricas. Check out your portfolio center. Please also check ongoing floating volatility patterns of Eco Wave and Centrais Electricas.
Diversification Opportunities for Eco Wave and Centrais Electricas
-0.6 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Eco and Centrais is -0.6. Overlapping area represents the amount of risk that can be diversified away by holding Eco Wave Power and Centrais Electricas Brasileira in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Centrais Electricas and Eco Wave 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 Eco Wave Power 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 Eco Wave i.e., Eco Wave and Centrais Electricas go up and down completely randomly.
Pair Corralation between Eco Wave and Centrais Electricas
Given the investment horizon of 90 days Eco Wave Power is expected to under-perform the Centrais Electricas. In addition to that, Eco Wave is 4.4 times more volatile than Centrais Electricas Brasileiras. It trades about -0.28 of its total potential returns per unit of risk. Centrais Electricas Brasileiras is currently generating about 0.18 per unit of volatility. If you would invest 563.00 in Centrais Electricas Brasileiras on October 26, 2024 and sell it today you would earn a total of 29.00 from holding Centrais Electricas Brasileiras or generate 5.15% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 94.74% |
| Values | Daily Returns |
Eco Wave Power vs. Centrais Electricas Brasileira
Performance |
| Timeline |
| Eco Wave Power |
| Centrais Electricas |
Eco Wave and Centrais Electricas Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Eco Wave and Centrais Electricas
The main advantage of trading using opposite Eco Wave and Centrais Electricas positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Eco Wave 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.| Eco Wave vs. Alternus Energy Group | Eco Wave vs. Triad Pro Innovators | Eco Wave vs. American Security Resources | Eco Wave vs. Verde Clean Fuels |
| 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 Pair Correlation module to compare performance and examine fundamental relationship between any two equity instruments.
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