Correlation Between REN Redes and EDP Energias
Can any of the company-specific risk be diversified away by investing in both REN Redes and EDP Energias 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 REN Redes and EDP Energias into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between REN Redes and EDP Energias, you can compare the effects of market volatilities on REN Redes and EDP Energias 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 REN Redes with a short position of EDP Energias. Check out your portfolio center. Please also check ongoing floating volatility patterns of REN Redes and EDP Energias.
Diversification Opportunities for REN Redes and EDP Energias
-0.23 | Correlation Coefficient |
Very good diversification
The 3 months correlation between REN and EDP is -0.23. Overlapping area represents the amount of risk that can be diversified away by holding REN Redes and EDP Energias in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on EDP Energias and REN Redes 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 REN Redes are associated (or correlated) with EDP Energias. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of EDP Energias has no effect on the direction of REN Redes i.e., REN Redes and EDP Energias go up and down completely randomly.
Pair Corralation between REN Redes and EDP Energias
Assuming the 90 days trading horizon REN Redes is expected to generate 0.47 times more return on investment than EDP Energias. However, REN Redes is 2.11 times less risky than EDP Energias. It trades about 0.09 of its potential returns per unit of risk. EDP Energias is currently generating about -0.07 per unit of risk. If you would invest 234.00 in REN Redes on December 2, 2024 and sell it today you would earn a total of 10.00 from holding REN Redes or generate 4.27% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Against |
Strength | Insignificant |
Accuracy | 100.0% |
Values | Daily Returns |
REN Redes vs. EDP Energias
Performance |
Timeline |
REN Redes |
EDP Energias |
REN Redes and EDP Energias Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with REN Redes and EDP Energias
The main advantage of trading using opposite REN Redes and EDP Energias positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if REN Redes position performs unexpectedly, EDP Energias 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 EDP Energias will offset losses from the drop in EDP Energias' long position.REN Redes vs. Sonae SGPS SA | REN Redes vs. The Navigator | REN Redes vs. EDP Energias | REN Redes vs. NOS SGPS SA |
EDP Energias vs. EDP Renovaveis | EDP Energias vs. Galp Energia SGPS | EDP Energias vs. Sonae SGPS SA | EDP Energias vs. Banco Comercial Portugues |
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 Equity Forecasting module to use basic forecasting models to generate price predictions and determine price momentum.
Other Complementary Tools
Portfolio Diagnostics Use generated alerts and portfolio events aggregator to diagnose current holdings | |
Commodity Directory Find actively traded commodities issued by global exchanges | |
Transaction History View history of all your transactions and understand their impact on performance | |
Options Analysis Analyze and evaluate options and option chains as a potential hedge for your portfolios | |
Equity Valuation Check real value of public entities based on technical and fundamental data |