Correlation Between Eneva SA and Mitre Realty

Can any of the company-specific risk be diversified away by investing in both Eneva SA and Mitre Realty 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 Mitre Realty into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Eneva SA and Mitre Realty Empreendimentos, you can compare the effects of market volatilities on Eneva SA and Mitre Realty 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 Mitre Realty. Check out your portfolio center. Please also check ongoing floating volatility patterns of Eneva SA and Mitre Realty.

Diversification Opportunities for Eneva SA and Mitre Realty

0.8

Correlation Coefficient

Eneva SA  Mitre Realty

Very poor diversification

The 3 months correlation between Eneva and Mitre is 0.8. Overlapping area represents the amount of risk that can be diversified away by holding Eneva SA and Mitre Realty Empreendimentos in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Mitre Realty Empreen 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 Mitre Realty. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Mitre Realty Empreen has no effect on the direction of Eneva SA i.e., Eneva SA and Mitre Realty go up and down completely randomly.

Pair Corralation between Eneva SA and Mitre Realty

Assuming the 90 days trading horizon Eneva SA is expected to generate 1.68 times less return on investment than Mitre Realty. But when comparing it to its historical volatility, Eneva SA is 1.14 times less risky than Mitre Realty. It trades about 0.09 of its potential returns per unit of risk. Mitre Realty Empreendimentos is currently generating about 0.14 of returns per unit of risk over similar time horizon. If you would invest  279.00  in Mitre Realty Empreendimentos on December 30, 2024 and sell it today you would earn a total of  66.00  from holding Mitre Realty Empreendimentos or generate 23.66% return on investment over 90 days.

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

Eneva SA  vs.  Mitre Realty Empreendimentos

Eneva SA

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Eneva SA are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively weak basic indicators, Eneva SA unveiled solid returns over the last few months and may actually be approaching a breakup point.

Mitre Realty Empreen

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Mitre Realty Empreendimentos are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively uncertain basic indicators, Mitre Realty unveiled solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Eneva SA and Mitre Realty

The main advantage of trading using opposite Eneva SA and Mitre Realty positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Eneva SA position performs unexpectedly, Mitre Realty 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 Mitre Realty will offset losses from the drop in Mitre Realty's long position.

The idea behind Eneva SA and Mitre Realty Empreendimentos 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 Commodity Directory module to find actively traded commodities issued by global exchanges.