Correlation Between Central Puerto and Xcel Energy
Can any of the company-specific risk be diversified away by investing in both Central Puerto and Xcel 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 Central Puerto and Xcel Energy into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Central Puerto SA and Xcel Energy, you can compare the effects of market volatilities on Central Puerto and Xcel 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 Central Puerto with a short position of Xcel Energy. Check out your portfolio center. Please also check ongoing floating volatility patterns of Central Puerto and Xcel Energy.
Diversification Opportunities for Central Puerto and Xcel Energy
0.13 | Correlation Coefficient |
Average diversification
The 3 months correlation between Central and Xcel is 0.13. Overlapping area represents the amount of risk that can be diversified away by holding Central Puerto SA and Xcel Energy in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Xcel Energy and Central Puerto 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 Central Puerto SA are associated (or correlated) with Xcel Energy. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Xcel Energy has no effect on the direction of Central Puerto i.e., Central Puerto and Xcel Energy go up and down completely randomly.
Pair Corralation between Central Puerto and Xcel Energy
Given the investment horizon of 90 days Central Puerto SA is expected to generate 2.34 times more return on investment than Xcel Energy. However, Central Puerto is 2.34 times more volatile than Xcel Energy. It trades about 0.09 of its potential returns per unit of risk. Xcel Energy is currently generating about -0.03 per unit of risk. If you would invest 302.00 in Central Puerto SA on January 31, 2024 and sell it today you would earn a total of 722.00 from holding Central Puerto SA or generate 239.07% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Together |
Strength | Insignificant |
Accuracy | 100.0% |
Values | Daily Returns |
Central Puerto SA vs. Xcel Energy
Performance |
Timeline |
Central Puerto SA |
Xcel Energy |
Central Puerto and Xcel Energy Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Central Puerto and Xcel Energy
The main advantage of trading using opposite Central Puerto and Xcel Energy positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Central Puerto position performs unexpectedly, Xcel 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 Xcel Energy will offset losses from the drop in Xcel Energy's long position.Central Puerto vs. Korea Electric Power | Central Puerto vs. Centrais Electricas Brasileiras | Central Puerto vs. MGE Energy | Central Puerto vs. IDACORP |
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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 Funds Screener module to find actively-traded funds from around the world traded on over 30 global exchanges.
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