Correlation Between Eneva SA and MPM Corpreos
Can any of the company-specific risk be diversified away by investing in both Eneva SA and MPM Corpreos 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 Eneva SA and MPM Corpreos into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Eneva SA and MPM Corpreos SA, you can compare the effects of market volatilities on Eneva SA and MPM Corpreos 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 Eneva SA with a short position of MPM Corpreos. Check out your portfolio center. Please also check ongoing floating volatility patterns of Eneva SA and MPM Corpreos.
Diversification Opportunities for Eneva SA and MPM Corpreos
0.77 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Eneva and MPM is 0.77. Overlapping area represents the amount of risk that can be diversified away by holding Eneva SA and MPM Corpreos SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on MPM Corpreos SA and Eneva 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 Eneva SA are associated (or correlated) with MPM Corpreos. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of MPM Corpreos SA has no effect on the direction of Eneva SA i.e., Eneva SA and MPM Corpreos go up and down completely randomly.
Pair Corralation between Eneva SA and MPM Corpreos
Assuming the 90 days trading horizon Eneva SA is expected to generate 0.74 times more return on investment than MPM Corpreos. However, Eneva SA is 1.35 times less risky than MPM Corpreos. It trades about -0.21 of its potential returns per unit of risk. MPM Corpreos SA is currently generating about -0.26 per unit of risk. If you would invest 1,146 in Eneva SA on October 4, 2024 and sell it today you would lose (93.00) from holding Eneva SA or give up 8.12% of portfolio value over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Together |
Strength | Significant |
Accuracy | 100.0% |
Values | Daily Returns |
Eneva SA vs. MPM Corpreos SA
Performance |
Timeline |
Eneva SA |
MPM Corpreos SA |
Eneva SA and MPM Corpreos Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Eneva SA and MPM Corpreos
The main advantage of trading using opposite Eneva SA and MPM Corpreos positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Eneva SA position performs unexpectedly, MPM Corpreos 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 MPM Corpreos will offset losses from the drop in MPM Corpreos' long position.Eneva SA vs. Companhia Energtica de | Eneva SA vs. Centrais Eltricas Brasileiras | Eneva SA vs. Companhia de Saneamento | Eneva SA vs. Companhia Paranaense de |
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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 Transaction History module to view history of all your transactions and understand their impact on performance.
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