Correlation Between NRG Energy, and Metalrgica Riosulense

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

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

Diversification Opportunities for NRG Energy, and Metalrgica Riosulense

-0.82

Correlation Coefficient

NRG Energy,  Metalrgica Riosulense

Pay attention - limited upside

The 3 months correlation between NRG and Metalrgica is -0.82. Overlapping area represents the amount of risk that can be diversified away by holding NRG Energy, and Metalrgica Riosulense SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Metalrgica Riosulense and NRG Energy, 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 NRG Energy, are associated (or correlated) with Metalrgica Riosulense. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Metalrgica Riosulense has no effect on the direction of NRG Energy, i.e., NRG Energy, and Metalrgica Riosulense go up and down completely randomly.

Pair Corralation between NRG Energy, and Metalrgica Riosulense

Assuming the 90 days trading horizon NRG Energy, is expected to under-perform the Metalrgica Riosulense. But the stock apears to be less risky and, when comparing its historical volatility, NRG Energy, is 1.28 times less risky than Metalrgica Riosulense. The stock trades about -0.22 of its potential returns per unit of risk. The Metalrgica Riosulense SA is currently generating about 0.02 of returns per unit of risk over similar time horizon. If you would invest  5,470  in Metalrgica Riosulense SA on October 4, 2024 and sell it today you would earn a total of  29.00  from holding Metalrgica Riosulense SA or generate 0.53% return on investment over 90 days.

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

NRG Energy,  vs.  Metalrgica Riosulense SA

NRG Energy,

Risk-Adjusted Performance

5 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in NRG Energy, are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, NRG Energy, may actually be approaching a critical reversion point that can send shares even higher in February 2025.

Metalrgica Riosulense

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Metalrgica Riosulense SA has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest uncertain performance, the Preferred Stock's basic indicators remain stable and the newest uproar on Wall Street may also be a sign of mid-term gains for the firm private investors.

Pair Trading with NRG Energy, and Metalrgica Riosulense

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

The idea behind NRG Energy, and Metalrgica Riosulense 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 Sign In To Macroaxis module to sign in to explore Macroaxis' wealth optimization platform and fintech modules.