Correlation Between ENGIE Energia and Banco De

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

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

Diversification Opportunities for ENGIE Energia and Banco De

-0.32

Correlation Coefficient

ENGIE Energia  Banco De

Very good diversification

The 3 months correlation between ENGIE and Banco is -0.32. Overlapping area represents the amount of risk that can be diversified away by holding ENGIE Energia Peru and Banco de Credito in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Banco de Credito and ENGIE Energia 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 ENGIE Energia Peru are associated (or correlated) with Banco De. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Banco de Credito has no effect on the direction of ENGIE Energia i.e., ENGIE Energia and Banco De go up and down completely randomly.

Pair Corralation between ENGIE Energia and Banco De

Assuming the 90 days trading horizon ENGIE Energia Peru is expected to generate 1.22 times more return on investment than Banco De. However, ENGIE Energia is 1.22 times more volatile than Banco de Credito. It trades about 0.04 of its potential returns per unit of risk. Banco de Credito is currently generating about -0.01 per unit of risk. If you would invest  410.00  in ENGIE Energia Peru on December 24, 2024 and sell it today you would earn a total of  10.00  from holding ENGIE Energia Peru or generate 2.44% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	92.06%
Values	Daily Returns

ENGIE Energia Peru  vs.  Banco de Credito

ENGIE Energia Peru

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in ENGIE Energia Peru are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. Despite somewhat strong technical and fundamental indicators, ENGIE Energia is not utilizing all of its potentials. The recent stock price disturbance, may contribute to short-term losses for the investors.

Banco de Credito

Risk-Adjusted Performance

Very Weak

Over the last 90 days Banco de Credito has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of rather sound basic indicators, Banco De is not utilizing all of its potentials. The recent stock price tumult, may contribute to shorter-term losses for the shareholders.

Pair Trading with ENGIE Energia and Banco De

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

The idea behind ENGIE Energia Peru and Banco de Credito 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 Share Portfolio module to track or share privately all of your investments from the convenience of any device.