Correlation Between NRG Energy and Becle SA
Can any of the company-specific risk be diversified away by investing in both NRG Energy and Becle SA 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 Becle SA into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between NRG Energy and Becle SA de, you can compare the effects of market volatilities on NRG Energy and Becle SA 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 Becle SA. Check out your portfolio center. Please also check ongoing floating volatility patterns of NRG Energy and Becle SA.
Diversification Opportunities for NRG Energy and Becle SA
-0.33 | Correlation Coefficient |
Very good diversification
The 3 months correlation between NRG and Becle is -0.33. Overlapping area represents the amount of risk that can be diversified away by holding NRG Energy and Becle SA de in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Becle SA de 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 Becle SA. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Becle SA de has no effect on the direction of NRG Energy i.e., NRG Energy and Becle SA go up and down completely randomly.
Pair Corralation between NRG Energy and Becle SA
Considering the 90-day investment horizon NRG Energy is expected to generate 0.47 times more return on investment than Becle SA. However, NRG Energy is 2.11 times less risky than Becle SA. It trades about 0.54 of its potential returns per unit of risk. Becle SA de is currently generating about 0.0 per unit of risk. If you would invest 7,792 in NRG Energy on July 10, 2024 and sell it today you would earn a total of 1,564 from holding NRG Energy or generate 20.07% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Against |
Strength | Insignificant |
Accuracy | 100.0% |
Values | Daily Returns |
NRG Energy vs. Becle SA de
Performance |
Timeline |
NRG Energy |
Becle SA de |
NRG Energy and Becle SA Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with NRG Energy and Becle SA
The main advantage of trading using opposite NRG Energy and Becle SA positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if NRG Energy position performs unexpectedly, Becle SA 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 Becle SA will offset losses from the drop in Becle SA's long position.NRG Energy vs. Pampa Energia SA | NRG Energy vs. AGL Energy | NRG Energy vs. Vistra Energy Corp | NRG Energy vs. Power Assets Holdings |
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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 Idea Breakdown module to analyze constituents of all Macroaxis ideas. Macroaxis investment ideas are predefined, sector-focused investing themes.
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