Correlation Between Energisa and Fundo Invest

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

By analyzing existing cross correlation between Energisa SA and Fundo Invest Imobiliario, you can compare the effects of market volatilities on Energisa and Fundo Invest 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 Energisa with a short position of Fundo Invest. Check out your portfolio center. Please also check ongoing floating volatility patterns of Energisa and Fundo Invest.

Diversification Opportunities for Energisa and Fundo Invest

0.12

Correlation Coefficient

Energisa  Fundo Invest

Average diversification

The 3 months correlation between Energisa and Fundo is 0.12. Overlapping area represents the amount of risk that can be diversified away by holding Energisa SA and Fundo Invest Imobiliario in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Fundo Invest Imobiliario and Energisa 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 Energisa SA are associated (or correlated) with Fundo Invest. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Fundo Invest Imobiliario has no effect on the direction of Energisa i.e., Energisa and Fundo Invest go up and down completely randomly.

Pair Corralation between Energisa and Fundo Invest

Assuming the 90 days trading horizon Energisa SA is expected to under-perform the Fundo Invest. But the stock apears to be less risky and, when comparing its historical volatility, Energisa SA is 2.91 times less risky than Fundo Invest. The stock trades about -0.12 of its potential returns per unit of risk. The Fundo Invest Imobiliario is currently generating about 0.01 of returns per unit of risk over similar time horizon. If you would invest  707.00  in Fundo Invest Imobiliario on October 25, 2024 and sell it today you would lose (38.00) from holding Fundo Invest Imobiliario or give up 5.37% of portfolio value over 90 days.

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

Energisa SA  vs.  Fundo Invest Imobiliario

Energisa SA

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Energisa SA has generated negative risk-adjusted returns adding no value to investors with long positions. Despite uncertain performance in the last few months, the Stock's technical and fundamental indicators remain somewhat strong which may send shares a bit higher in February 2025. The current disturbance may also be a sign of long term up-swing for the company investors.

Fundo Invest Imobiliario

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Fundo Invest Imobiliario has generated negative risk-adjusted returns adding no value to fund investors. Despite somewhat strong basic indicators, Fundo Invest is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Energisa and Fundo Invest

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

The idea behind Energisa SA and Fundo Invest Imobiliario 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.

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 Balance Of Power module to check stock momentum by analyzing Balance Of Power indicator and other technical ratios.