Correlation Between DENTSPLY SIRONA and ENGIE Brasil

Can any of the company-specific risk be diversified away by investing in both DENTSPLY SIRONA 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 DENTSPLY SIRONA and ENGIE Brasil into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between DENTSPLY SIRONA and ENGIE Brasil Energia, you can compare the effects of market volatilities on DENTSPLY SIRONA 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 DENTSPLY SIRONA with a short position of ENGIE Brasil. Check out your portfolio center. Please also check ongoing floating volatility patterns of DENTSPLY SIRONA and ENGIE Brasil.

Diversification Opportunities for DENTSPLY SIRONA and ENGIE Brasil

-0.17

Correlation Coefficient

DENTSPLY SIRONA  ENGIE Brasil

Good diversification

The 3 months correlation between DENTSPLY and ENGIE is -0.17. Overlapping area represents the amount of risk that can be diversified away by holding DENTSPLY SIRONA 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 DENTSPLY SIRONA 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 DENTSPLY SIRONA 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 DENTSPLY SIRONA i.e., DENTSPLY SIRONA and ENGIE Brasil go up and down completely randomly.

Pair Corralation between DENTSPLY SIRONA and ENGIE Brasil

Assuming the 90 days trading horizon DENTSPLY SIRONA is expected to under-perform the ENGIE Brasil. But the stock apears to be less risky and, when comparing its historical volatility, DENTSPLY SIRONA is 1.52 times less risky than ENGIE Brasil. The stock trades about -0.16 of its potential returns per unit of risk. The ENGIE Brasil Energia is currently generating about 0.07 of returns per unit of risk over similar time horizon. If you would invest  540.00  in ENGIE Brasil Energia on December 23, 2024 and sell it today you would earn a total of  65.00  from holding ENGIE Brasil Energia or generate 12.04% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	100.0%
Values	Daily Returns

DENTSPLY SIRONA  vs.  ENGIE Brasil Energia

DENTSPLY SIRONA

Risk-Adjusted Performance

Very Weak

Over the last 90 days DENTSPLY SIRONA has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fragile performance in the last few months, the Stock's basic indicators remain comparatively stable which may send shares a bit higher in April 2025. The newest uproar may also be a sign of mid-term up-swing for the firm private investors.

ENGIE Brasil Energia

Risk-Adjusted Performance

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in ENGIE Brasil Energia are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively uncertain basic indicators, ENGIE Brasil unveiled solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with DENTSPLY SIRONA and ENGIE Brasil

The main advantage of trading using opposite DENTSPLY SIRONA and ENGIE Brasil positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if DENTSPLY SIRONA 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.

The idea behind DENTSPLY SIRONA and ENGIE Brasil Energia pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.

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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 Manager module to state of the art Portfolio Manager to monitor and improve performance of your invested capital.