Correlation Between Atco and Engie SA
Can any of the company-specific risk be diversified away by investing in both Atco and Engie 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 Atco and Engie SA into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Atco and Engie SA ADR, you can compare the effects of market volatilities on Atco and Engie 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 Atco with a short position of Engie SA. Check out your portfolio center. Please also check ongoing floating volatility patterns of Atco and Engie SA.
Diversification Opportunities for Atco and Engie SA
Very good diversification
The 3 months correlation between Atco and Engie is -0.25. Overlapping area represents the amount of risk that can be diversified away by holding Atco and Engie SA ADR in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Engie SA ADR and Atco 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 Atco are associated (or correlated) with Engie SA. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Engie SA ADR has no effect on the direction of Atco i.e., Atco and Engie SA go up and down completely randomly.
Pair Corralation between Atco and Engie SA
Assuming the 90 days horizon Atco is expected to generate 1.03 times more return on investment than Engie SA. However, Atco is 1.03 times more volatile than Engie SA ADR. It trades about -0.01 of its potential returns per unit of risk. Engie SA ADR is currently generating about -0.36 per unit of risk. If you would invest 3,502 in Atco on August 28, 2024 and sell it today you would lose (7.00) from holding Atco or give up 0.2% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Atco vs. Engie SA ADR
Performance |
| Timeline |
| Atco |
| Engie SA ADR |
Atco and Engie SA Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Atco and Engie SA
The main advantage of trading using opposite Atco and Engie SA positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Atco position performs unexpectedly, Engie 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 Engie SA will offset losses from the drop in Engie SA's long position.The idea behind Atco and Engie SA ADR 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.| Engie SA vs. TransAlta Corp | Engie SA vs. Pampa Energia SA | Engie SA vs. Vistra Energy Corp | Engie SA vs. NRG Energy |
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 Volatility module to check portfolio volatility and analyze historical return density to properly model market risk.
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