Correlation Between Empreendimentos Pague and NRG Energy,

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

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

Diversification Opportunities for Empreendimentos Pague and NRG Energy,

0.74

Correlation Coefficient

Empreendimentos Pague  NRG Energy,

Poor diversification

The 3 months correlation between Empreendimentos and NRG is 0.74. Overlapping area represents the amount of risk that can be diversified away by holding Empreendimentos Pague Menos and NRG Energy, in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on NRG Energy, and Empreendimentos Pague 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 Empreendimentos Pague Menos are associated (or correlated) with NRG Energy,. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of NRG Energy, has no effect on the direction of Empreendimentos Pague i.e., Empreendimentos Pague and NRG Energy, go up and down completely randomly.

Pair Corralation between Empreendimentos Pague and NRG Energy,

Assuming the 90 days trading horizon Empreendimentos Pague Menos is expected to generate 1.37 times more return on investment than NRG Energy,. However, Empreendimentos Pague is 1.37 times more volatile than NRG Energy,. It trades about -0.06 of its potential returns per unit of risk. NRG Energy, is currently generating about -0.12 per unit of risk. If you would invest  321.00  in Empreendimentos Pague Menos on October 6, 2024 and sell it today you would lose (18.00) from holding Empreendimentos Pague Menos or give up 5.61% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	94.74%
Values	Daily Returns

Empreendimentos Pague Menos  vs.  NRG Energy,

Empreendimentos Pague

Risk-Adjusted Performance

5 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Empreendimentos Pague Menos are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively uncertain basic indicators, Empreendimentos Pague unveiled solid returns over the last few months and may actually be approaching a breakup point.

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.

Pair Trading with Empreendimentos Pague and NRG Energy,

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

The idea behind Empreendimentos Pague Menos and NRG Energy, 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 Portfolio Comparator module to compare the composition, asset allocations and performance of any two portfolios in your account.