Correlation Between Itasa Investimentos and Eneva SA

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

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

Diversification Opportunities for Itasa Investimentos and Eneva SA

0.79

Correlation Coefficient

Itasa Investimentos  Eneva SA

Poor diversification

The 3 months correlation between Itasa and Eneva is 0.79. Overlapping area represents the amount of risk that can be diversified away by holding Itasa Investimentos and Eneva SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Eneva SA and Itasa Investimentos 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 Itasa Investimentos are associated (or correlated) with Eneva SA. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Eneva SA has no effect on the direction of Itasa Investimentos i.e., Itasa Investimentos and Eneva SA go up and down completely randomly.

Pair Corralation between Itasa Investimentos and Eneva SA

Assuming the 90 days trading horizon Itasa Investimentos is expected to under-perform the Eneva SA. But the preferred stock apears to be less risky and, when comparing its historical volatility, Itasa Investimentos is 1.53 times less risky than Eneva SA. The preferred stock trades about 0.0 of its potential returns per unit of risk. The Eneva SA is currently generating about 0.03 of returns per unit of risk over similar time horizon. If you would invest  1,155  in Eneva SA on November 29, 2024 and sell it today you would earn a total of  35.00  from holding Eneva SA or generate 3.03% return on investment over 90 days.

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

Itasa Investimentos  vs.  Eneva SA

Itasa Investimentos

Risk-Adjusted Performance

Very Weak

Over the last 90 days Itasa Investimentos has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively stable basic indicators, Itasa Investimentos is not utilizing all of its potentials. The newest stock price uproar, may contribute to short-horizon losses for the private investors.

Eneva SA

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Eneva SA are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively stable basic indicators, Eneva SA is not utilizing all of its potentials. The current stock price uproar, may contribute to short-horizon losses for the private investors.

Pair Trading with Itasa Investimentos and Eneva SA

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

The idea behind Itasa Investimentos and Eneva SA 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.