Correlation Between WEG SA and Centro De
Can any of the company-specific risk be diversified away by investing in both WEG SA and Centro 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 WEG SA and Centro De into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between WEG SA and Centro de Imagem, you can compare the effects of market volatilities on WEG SA and Centro 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 WEG SA with a short position of Centro De. Check out your portfolio center. Please also check ongoing floating volatility patterns of WEG SA and Centro De.
Diversification Opportunities for WEG SA and Centro De
Very good diversification
The 3 months correlation between WEG and Centro is -0.34. Overlapping area represents the amount of risk that can be diversified away by holding WEG SA and Centro de Imagem in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Centro de Imagem and WEG SA 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 WEG SA are associated (or correlated) with Centro De. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Centro de Imagem has no effect on the direction of WEG SA i.e., WEG SA and Centro De go up and down completely randomly.
Pair Corralation between WEG SA and Centro De
Assuming the 90 days trading horizon WEG SA is expected to generate 0.54 times more return on investment than Centro De. However, WEG SA is 1.86 times less risky than Centro De. It trades about -0.02 of its potential returns per unit of risk. Centro de Imagem is currently generating about -0.21 per unit of risk. If you would invest 5,590 in WEG SA on September 26, 2024 and sell it today you would lose (166.00) from holding WEG SA or give up 2.97% of portfolio value over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Against |
Strength | Insignificant |
Accuracy | 100.0% |
Values | Daily Returns |
WEG SA vs. Centro de Imagem
Performance |
Timeline |
WEG SA |
Centro de Imagem |
WEG SA and Centro De Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with WEG SA and Centro De
The main advantage of trading using opposite WEG SA and Centro De positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if WEG SA position performs unexpectedly, Centro 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 Centro De will offset losses from the drop in Centro De's long position.The idea behind WEG SA and Centro de Imagem 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.Centro De vs. Engie Brasil Energia | Centro De vs. WEG SA | Centro De vs. Ambev SA | Centro De vs. M Dias Branco |
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 Piotroski F Score module to get Piotroski F Score based on the binary analysis strategy of nine different fundamentals.
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