Correlation Between WEG SA and Engie Brasil
Can any of the company-specific risk be diversified away by investing in both WEG SA 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 WEG SA and Engie Brasil into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between WEG SA and Engie Brasil Energia, you can compare the effects of market volatilities on WEG SA 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 WEG SA with a short position of Engie Brasil. Check out your portfolio center. Please also check ongoing floating volatility patterns of WEG SA and Engie Brasil.
Diversification Opportunities for WEG SA and Engie Brasil
-0.54 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between WEG and Engie is -0.54. Overlapping area represents the amount of risk that can be diversified away by holding WEG SA 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 WEG SA 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 WEG SA 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 WEG SA i.e., WEG SA and Engie Brasil go up and down completely randomly.
Pair Corralation between WEG SA and Engie Brasil
Assuming the 90 days trading horizon WEG SA is expected to generate 1.34 times more return on investment than Engie Brasil. However, WEG SA is 1.34 times more volatile than Engie Brasil Energia. It trades about -0.13 of its potential returns per unit of risk. Engie Brasil Energia is currently generating about -0.29 per unit of risk. If you would invest 5,620 in WEG SA on August 24, 2024 and sell it today you would lose (247.00) from holding WEG SA or give up 4.4% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
WEG SA vs. Engie Brasil Energia
Performance |
| Timeline |
| WEG SA |
| Engie Brasil Energia |
WEG SA and Engie Brasil Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with WEG SA and Engie Brasil
The main advantage of trading using opposite WEG SA and Engie Brasil positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if WEG SA 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.| WEG SA vs. METISA Metalrgica Timboense | WEG SA vs. Lupatech SA | WEG SA vs. Recrusul SA | WEG SA vs. Fras le SA |
| Engie Brasil vs. WEG SA | Engie Brasil vs. Transmissora Aliana de | Engie Brasil vs. Fleury SA | Engie Brasil vs. BB Seguridade Participacoes |
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 Suggestion module to get suggestions outside of your existing asset allocation including your own model portfolios.
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